IHG Review_Lo

IHG Annual Review and
Summary Financial Statement 2010
We’re a global hotel company – 1 Overview 6 Delivering
the world’s largest by number great brands
2 Headlines
of rooms – operating seven
well-known brands internationally. 3 Chairman’s 6 Introduction
Our Vision is to become one of statement 7 InterContinental
the world’s great companies. 4 Chief Executive’s Hotels & Resorts
For us this means having great review 8 Crowne Plaza
brands which lie at the heart of Hotels & Resorts
5 Message from
Great Hotels Guests Love. the IAHI 9 Hotel Indigo
10 The Holiday Inn
family of brands
12 Staybridge Suites
13 Candlewood Suites
14 Priority Club
Rewards
We want people to feel good about
what we do and how we do it. Around
the world, we aim to delight our guests,
inspire our people, act responsibly
and generate financial returns for
our hotel owners and our investors.
7
This requires:
Great Brands
which not only stand out, but also
stand for something that resonates
with our guests.
Great People
who bring our brands to life and
give guests every reason to stay
with us time and again.
Great Values InterContinental Bangkok, Thailand
which bring our people together as
10
a happy, successful and responsible
business.
Great Ways of Working
which place our guests at the heart
of everything we do, and support
our hotel owners to do the same.
We’ll be a great company when:
• Guests love to stay with us
• People love to work for us
• Owners love our brands
• Investors love our performance
Cover image:
InterContinental Shanghai Expo, China Holiday Inn, Singapore
1
15 How we operate 24 Where we operate 32 Facts and figures
15 Worldwide scale: 24 Around the world 32 Summary
Our operating system 26 The Americas financial statement
and our business model 36 Our senior
OVERVIEW
28 Europe, Middle East
16 Our people and Africa leadership team
18 Global technology 30 Asia Pacific 38 Summary
20 Business reputation Directors’ report
22 Corporate responsibility 39 Corporate governance
40 Summary
remuneration report
44 Investor information
45 Financial calendar
and Contacts
GREAT BRANDS
8 9
HOW WE OPERATE
WHERE WE OPERATE
Crowne Plaza Gurgaon, India Hotel Indigo London-Tower Hill, UK
12 13 FACTS AND FIGURES
Staybridge Suites Newcastle, UK Candlewood Suites Orlando, US
2 IHG Annual Review and Summary Financial Statement 2010
Headlines
Total gross revenue from all hotels
in IHG system up 11% to $18.7bn*
Revenue up 6%† to $1,628m
Operating profit before exceptional items:
Group $444m (2009 $363m†)
The Americas $369m (2009 $288m)
EMEA $125m (2009 $127m†)
Asia Pacific $89m (2009 $52m)
Revenue per available room∞ up 6.2%
Total number of rooms operating under
IHG brands 647,161 (4,437 hotels)
2,956 hotels operating under the new
Holiday Inn standards (89% of the
global Holiday Inn estate)
68% of total rooms revenue booked through
IHG’s channels or by Priority Club Rewards
members direct to hotel
8m new Priority Club Rewards members
added (56m members in total)
Final dividend up 21% at 35.2¢
(sterling equivalent of 22p)
* Total rooms revenue from franchised hotels and total
hotel revenue from managed, owned and leased
hotels (not all attributable to IHG).
† Includes one significant liquidated damages receipt
in 2009 in EMEA totalling $3m.
∞ Total system rooms revenue divided by the number
of room nights available.
InterContinental Sanya Resort, China
Headlines and Chairman’s statement 3
Chairman’s statement
Dear Shareholder
OVERVIEW
Performance
Revenue increased 6 per cent to $1.6 billion, with operating profit before exceptional
items of $444 million, up 22 per cent. Adjusted earnings per share decreased
4 per cent from 102.8 cents to 98.6 cents.
The Board is recommending a 21 per cent increase to the final dividend for 2010,
taking it to 35.2 cents per share. This will give a full-year dividend of 48.0 cents per
share, 16 per cent higher than 2009. This converts to a sterling full-year dividend of
30.0 pence, up 15 per cent compared with 2009. Subject to shareholder approval,
the final dividend will be paid on 3 June 2011.
GREAT BRANDS
Board
I am pleased to welcome Jim Abrahamson and Kirk Kinsell to the Board as Executive
Directors. Their appointments were effective from 1 August 2010. Each has retained
his existing responsibilities as a member of IHG’s Executive Committee.
Jim joined IHG as President of the Americas region in January 2009 from Global Hyatt
Corporation. He has over 30 years of management experience in hotel operations,
branding, development and franchisee relations, including 12 years with Hilton Hotels
Corporation.
Kirk joined IHG in 2002 as Chief Development Officer for the Americas region, having
“During 2010 we grew both sales previously held senior franchise and brand operations roles with the former Holiday Inn
and profits and delivered on our Corporation and ITT Sheraton. He was appointed to IHG’s Executive Committee as
HOW WE OPERATE
priorities. The recommended President, EMEA, in September 2007.
21 per cent growth in the final Both Jim and Kirk are highly regarded within the industry and have a deep
dividend reflects our confidence understanding of the hotel business. This significant operational experience will
in IHG’s prospects.” be of great benefit to IHG’s Board.
David Webster
Financial position and shareholder returns
Chairman
Given the uncertainty in the wider economic environment during 2010, we continued
with our prudent approach to managing our balance sheet. Careful control over cash
has enabled us to reduce our overall net debt position by $349 million to $743 million.
No returns above normal dividends were made to shareholders in 2010. Total funds
returned since March 2004 amount to more than £3.5 billion.
WHERE WE OPERATE
Outlook
Our people were central to our strong performance in 2010. On behalf of the Board
I should like to thank everyone in IHG for their hard work and commitment during
the year.
With improving business confidence and corporate profitability, combined with a
lower level of hotel openings expected across the industry, forward trends look
favourable. Our global scale, attractive brands, powerful system and experienced
management team position us well to drive market share and improve margins into
the future.
FACTS AND FIGURES
David Webster
Chairman
4 IHG Annual Review and Summary Financial Statement 2010
Chief Executive’s review
In a year when the global hotel industry returned to growth,
we continued to improve the strength of our brands and our system.
This has resulted in a greater share of the global pipeline and the
successful near completion of the Holiday Inn relaunch.
The economic environment remained uncertain throughout 2010. But as the year
progressed the hotel recovery gathered pace, resulting in growth in revenue per
available room (RevPAR) in each of our regions and a rise of 6.2 per cent for the
Group as a whole.
This led to good growth in revenues and profit for IHG and we continued to make
excellent progress against our long-term strategic priorities. Consequently we
are well placed to drive market share and improve margins in the years to come.
Driving market share
The relaunch of Holiday Inn was close to completion at the end of the year.
2,956 hotels are now operating under the new brand standards, which have revitalised
our largest brand family globally. Relaunched hotels continue to perform strongly.
The global roll-out of our newest brand, Hotel Indigo, continued as we opened a
second hotel in London at Tower Hill and the first Hotel Indigo in Asia Pacific in
Shanghai. We signed 25 Hotel Indigos into our pipeline, taking the total number
“We’ve made excellent progress this under development to 62.
year, strengthening our brands and
The power of our system and brands helped us achieve an 18 per cent share of the
using our scale advantage to drive
global pipeline of new-build hotels. During the year we re-entered the Hawaii market
market share and improve margins.
with Holiday Inn and formed an innovative alliance with Las Vegas Sands Corp.,
We will continue to focus on investing
bringing The Venetian and Palazzo Resorts into the InterContinental system.
behind growth and creating value
for our shareholders.” In 2010, 68 per cent of rooms revenue came through our reservations channels or
by Priority Club Rewards members direct to hotels. We also signed a record number
Andrew Cosslett
of new Priority Club Rewards members in the year. Total membership now stands
Chief Executive
at 56 million.
Growing margins
We kept regional and central costs broadly in line with 2009 excluding the impact of
performance-based incentives. This, and our drive to improve the efficiency of the
Group, helped increase fee-based margins by 1.1 percentage points.
Our Vision is to become one of the world’s great companies and the actions we have
taken in 2010 have reaffirmed that we are on the right path. We continue to focus
hard on our strategic priorities to drive market share and improve margins, and
with industry trends set to be positive, we look forward to a successful 2011.
Chief Executive’s review and Message from the IAHI 5
OVERVIEW
Our Vision is to become one of the world’s great companies A profitable future together
Over the past years we have put the key elements in place to help us fulfil our Vision.
We are working side by side with our owners on our shared core purpose of creating “All IAHI members will likely not share
Great Hotels Guests Love. We continue to invest in strengthening our brands so that the same view of 2010. Some will
they stand out and stand for something in the hearts and minds of our guests. And we have seen significant recovery in their
GREAT BRANDS
continue to align our organisation behind those brands, helping to inspire pride in the markets; others will have continued to
people who bring the brands to life for our guests every day, in every country. These face challenges. But no matter where
key elements, delivered consistently, will ensure that guests prefer our brands, they are on the road to recovery, every
helping us to win market share. IAHI member will share a positive view
of our collaboration with IHG.
Our Vision to become great This year, we launched Celebrate Service,
a global tribute to our greatest asset –
When we have Delivered by Who share With We will become
our people. This collaboration, which
one of started as an idea of past IAHI Chairman
Great Great Great Great the world’s Mark Carrier, became a platform for
Brands People Values Ways of Great celebrating the contribution of every
Working Companies employee. Building on that success,
HOW WE OPERATE
the IAHI encouraged and supported the
introduction of People Tools to all IHG
hotels, responding to what our members
Driving brand preference said was a key challenge: recruiting,
We are in the people business. It’s the people in our hotels that really bring the brands developing, and retaining talent.
to life for our guests. So in 2011 we are rolling out a world class suite of tools that give Another key challenge is driving
our owners the opportunity to immerse their people in our brands still further. The down costs. In 2010, we introduced
tools will help them hire the best person for their brand, clarify their understanding one cost-saving innovation, InnSupply,
of what a guest is looking for in that brand and give them the tools to motivate and which began as an IAHI initiative. When
recognise their people. These tools will help us to drive consistency in brand delivery it became apparent that the resources
and help our owners to engage, develop and retain good people. needed to support a procurement
programme were beyond our scope,
WHERE WE OPERATE
Global opportunities
we approached IHG for their expertise
We are always looking for new opportunities around the world. There are, however, to launch such a programme. InnSupply
huge opportunities for our existing brand portfolio. We are focused on quality not rolls out in early 2011, and the savings
quantity. The Holiday Inn relaunch has been one of the biggest initiatives in hotel to our owners in dollars and time
history and we are now preparing to refresh Crowne Plaza. We have been pleased should be significant.
with the results of our boutique brand, Hotel Indigo, this year and are looking forward
The benefits of the IAHI and IHG working
to an escalated roll-out next year. Our brands are benefiting from the opportunities
closely together have never been more
opening up in emerging markets where we are building a strong position.
apparent. Working together, we will
continue to build a profitable future
for every owner.”
Bill DeForrest Chairman,
IAHI, the Owners’ Association
FACTS AND FIGURES
Andrew Cosslett
Chief Executive
For further information go to
www.iahi.org
6 IHG Annual Review and Summary Financial Statement 2010
Great Hotels Guests Love
Delivering great brands
Great brands lie at the heart of Great Hotels Guests Love. Guests
want our brands to offer something distinctive and special. And they
want to feel certain they will enjoy the same high-quality experience
every time. Providing guests with this confidence underpins our brand
strength, as does the training and dedication of our people. Great
brands, combined with the scale and power of our system, allow us
to grow return on investment and increase hotel owner satisfaction.
The right people
The experience we create for our guests starts with our people. Getting the right
people with the right training to deliver a distinctive experience for each of our brands
is the aim of our People Tools (see page 16).
The right environment
The right people need the right environment to create great guest experiences. This
was the main goal of our $1 billion relaunch of Holiday Inn. The global refresh, the
largest ever in the hospitality industry, has driven a significant improvement in guest
satisfaction and revenue per available room (RevPAR) across our hotels around
the world. Since 2005 we have also added 1,200 hotels to the portfolio and removed
around 1,000 others that were not up to high enough standards (see pages 10 and 11).
“Our powerful system, the quality of
our hotels and ability of our people
enable us to deliver a consistently
great guest experience. That means
our brands are ideally placed to
outperform our competitors.”
Tom Seddon
Chief Marketing Officer
Holiday Inn Pattaya, Thailand
Our powerful system
In addition to a great guest experience, a global hotel brand needs a powerful global
operating system and marketing strength to attract and retain customers. IHG’s
$1 billion system fund attracts guests and drives revenue for owners in many ways.
These include our reservations channels, regional sales teams and the world’s
largest loyalty club scheme, Priority Club Rewards, with 56 million members. Our
system is the reason we attract over 146 million room nights per annum and five
rooms are booked with us every second. It also supports successful programmes
such as our $100 million ‘Stay You’ campaign for Holiday Inn (see page 11).
Standing for something special
Brands become great when they stand out and stand for something that people
remember and choose first. Over the next eight pages we set out how we are
developing our brands to create Great Hotels Guests Love and become one of the
world’s great companies.
Great brands 7
InterContinental® Hotels & Resorts more on the web: www.ihgplc.com
OVERVIEW
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you awardedrand in
In the know
Did We were s Hotel B usiness
We’ve been on the international scene es st B pe’
usin ‘Be
st B d’ and in Euro er
for decades, so no-one knows the ‘Be orl
W and vell
world like we do. We love to share our the otel Br ess Tra l.
H l
usin 0 po
knowledge with our guests and they by B n a 201
i
love our understated service and style.
Located in more than 60 countries, we’ve got all
GREAT BRANDS
the local insight that comes with over 60 years
of experience.
Our people know that well-travelled, affluent guests
want to connect with the essence of a location. So
it’s every team member’s desire to help guests enjoy
authentic and enriching experiences that broaden
their outlook and make the most of their time with us.
To help guests get ‘in the know’ we offer Destination
Videos, part of InterContinental’s Concierge
programme. They’ve received over 4.5 million views
on our website and YouTube. Our global concierge
HOW WE OPERATE
Insider Guides are also available on a free iPad app
at www.intercontinental.com/insiderguides
Hotels in
Region Hotels Rooms pipeline
Americas 56 19,120 5
EMEA 64 20,111 24
Asia Pacific 51 19,198 31
Total 171 58,429 60
www.intercontinental.com
Being local
We opened nine new InterContinental hotels this year,
WHERE WE OPERATE
with flagship properties in Shanghai and Nanjing,
China; New York, US; and Mendoza, Argentina.
This took our global estate to 171 hotels. We also
signed agreements to open new hotels in Cartagena,
Colombia; Osaka, Japan; Beijing, China; and Kuala
Lumpur, Malaysia, boosting our pipeline to 60 hotels.
This planned growth in strategic locations across the
globe is key to expanding our knowledge of the world
and making our brand more accessible to our guests.
Extending the brand
In 2010 InterContinental launched its first ever China
FACTS AND FIGURES
brand campaign. This featured our new properties
the InterContinental Sanya Resort, InterContinental
Shanghai Expo and InterContinental Nanjing.
The campaign reached around 25 million people
across Greater China.
InterContinental Mendoza, Argentina
8 IHG Annual Review and Summary Financial Statement 2010
Crowne Plaza® Hotels & Resorts
Celebrate your stay
Crowne Plaza Hotels & Resorts is our upscale brand
of hotels located in urban centres, gateway cities and
resort destinations across more than 56 countries.
We are recognised as The Place to Meet as we focus on
providing a better experience for both meeting planners
and their attendees. We also know a good night’s sleep
only truly begins once you’re able to shut out the world
and switch off, which is why we’ve introduced a popular
dedicated sleep programme called Sleep Advantage®.
Hotels in
Region Hotels Rooms pipeline
Americas 209 57,073 27
EMEA 98 22,941 25
Asia Pacific 81 26,141 71
Total 388 106,155 123
www.crowneplaza.com
We love to make sure that our guests have fun when they stay with us.
We do this by combining the very best facilities with great service,
helping our guests get more from their trip beyond work.
Crowne Plaza Gurgaon, India
Leading growth
Crowne Plaza is the fourth largest upscale hotel brand in the
world. It also has the most hotels in the development pipeline
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of any upscale brand globally. We signed hotels in 2010 in
k St. Petersburg, Changchun, Amsterdam and we opened in
you yers rateNdo.1 Bangkok. We’re opening more than 120 hotels over the next
Did ravel bulaza the siness few years and in 2011 we’ll be developing plans for a refresh
of the brand, further improving the guest experience.
T P Bu el
wne d in Hot
Cro e bran nual US .
cal an 10 Official Partner of BMW Motorsport
ups News’ r vey 20
vel Su Crowne Plaza has joined forces with BMW Motorsport in
Tra Chain
a three-year global partnership to help us drive revenue by
reaching more customers than ever before. It’s a strong brand
fit as we do business in the same markets and share the same
commitment to service. We also share the same customers,
together offering them a great lifestyle choice.
Great brands
Page header 9
Hotel Indigo® more on the web: www.ihgplc.com
OVERVIEW
Refreshingly local
w?
knongwriter
We love the fact that we’re different,
right down to our local take on design. ou
We’re all about neighbourhoods and id y and singfieerl/dsoteamthd
D digo ing ver ee
take every opportunity to share the
el In Bed unc
o ots
colour, ambience and flavours of our Hot atasha ear to ood sp
localities with our guests. N a st y bourh ica.
up l neigh er
GREAT BRANDS
t Am
bes across
Hotel Indigo combines the individuality of a boutique
hotel with the consistency and reliability of a
branded hotel. We go out of our way to make our
neighbourhoods easy to discover and appreciate.
The neighbourhood setting, modern design and
our commitment to inspired service are what set
Hotel Indigo apart. That’s why we appeal to the
upscale guest who is well-travelled, has an eye for
design, an appreciation for art and is looking for
something different.
Hotels in
Region Hotels Rooms pipeline
HOW WE OPERATE
Americas 35 4,254 46
EMEA 2 110 11
Asia Pacific 1 184 5
Total 38 4,548 62
www.hotelindigo.com
Our youngest brand
We’ve only just celebrated our sixth birthday,
but our youngest brand is growing at great pace.
We finished the year with 38 hotels and have over
60 more in the pipeline. We’re set to open in major
WHERE WE OPERATE
cities such as Madrid, Lisbon, Vancouver, Mexico City,
Glasgow, New Orleans and Berlin. We’ve also now
launched the brand in Asia Pacific with Shanghai on
the Bund, which will be followed by openings in Taipei,
Bangkok and Jakarta. This year we opened a second
London property, Hotel Indigo at Tower Hill, in the
centre of the City’s Square Mile, and our fourth hotel
in New York State.
Pulling power
In 2010, J.D. Power and Associates featured
Hotel Indigo for the first time in their customer
satisfaction reports. Guests at new brand hotels,
FACTS AND FIGURES
such as Hotel Indigo, report they’ve been happier
with their stay over the past year than those staying
with more established brands.
Hotel Indigo London-Tower Hill, UK
10 IHG Annual Review and Summary Financial Statement 2010
Holiday Inn®, Holiday Inn Express® and Holiday Inn Club Vacations®
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you l Brand odfatyhInn
Did on ‘Hotenew Holi Design Official hotel services
w
We for the t Room Hotel provider to the London
ar’ s Gues ropean
Ye es 2012 Olympic and
r Eu ds.
Exp e 2010 Awar Paralympic Games.
n
at th Desig
Every second 3 guests
check into our hotels.
Every week 2 Holiday Inn
Express hotels open.
Every year 120 million
people stay at our hotels.
Following the ‘Stay You’
campaign, awareness
of the brand rose by
6 percentage points in the
US and Canada last year.
Championing the real you: Our friendly people love to make our guests feel totally comfortable,
Holiday Inn Holiday Inn Express Holiday Inn Club Vacations
We’ve always been known for our friendly One of the fastest growing hotel brands, We provide a fun and relaxing
service, comfort and value. Now we’re Holiday Inn Express offers convenience environment where memorable
completing our worldwide relaunch, and comfort at great value. Like Holiday vacations are created and shared among
our business and leisure travellers can Inn, we’ve almost completed the brand’s family and friends time and again.
expect even better quality and service. relaunch. This means our guests can Families have been vacationing with
Our new identity, contemporary lobbies expect the fresh, clean and comfortable Holiday Inn for more than 50 years.
and refreshed guest rooms are all stay they’re used to, with improved The new Holiday Inn Club Vacations
designed to help guests relax and service and a more contemporary feel – brand provides the same great value
simply be themselves. whether on business, on holiday or just and family-friendly atmosphere in
passing through. a vacation resort setting.
Hotels in Hotels in
Resorts in
Region Hotels Rooms pipeline Region Hotels Rooms pipeline Region Resorts Rooms pipeline
Americas 812 144,683 187 Americas 1,847 159,867 407 Americas 6 2,892 0
EMEA 325 52,945 41 EMEA 198 23,706 47 Total 6 2,892 0
Asia Pacific 104 29,597 85 Asia Pacific 30 7,655 40
Total 1,241 227,225 313 Total 2,075 191,228 494 www.hiclubvacations.com
www.holidayinn.com www.hiexpress.com
Great brands 11
more on the web: www.ihgplc.com
‘Stay You’
OVERVIEW
China’s largest
photo exhibition
on the
Great Wall.
Holiday Inn Hotels &
GREAT BRANDS
Resorts were voted ‘Best
Mid-Market Hotel Brand
in the World’ and ‘Best
Mid-Market Hotel Brand’
in Asia Pacific for the
10th consecutive year.
Holiday Inn Club Vacations
– a fun and relaxing
HOW WE OPERATE
environment where
memorable vacations are
created and shared among
family and friends time
and again.
whether they arrive in their suit, or shorts and a T-shirt.
WHERE WE OPERATE
Staying power
We’ve all but completed the $1 billion Holiday Inn relaunch, and we extended the pipeline in China, Turkey, Germany and
the biggest-ever project of its kind in the hospitality industry. France. At Dubai Airport we opened the largest Holiday Inn
This was quite an achievement, especially in such a tough global Express in Europe, Middle East and Africa.
economic climate. At the end of 2010, almost 3,000 hotels were
operating under the new Holiday Inn standards, approximately London 2012 Olympic and Paralympic Games
90% of the global Holiday Inn estate. The refreshed hotels offer We continued our preparations to welcome the world for
modern spaces, friendly service and a great night’s sleep in London 2012. We announced a number of initiatives to help the
72 countries worldwide. organising committee, LOCOG (see page 29), and are preparing
The benefits of the investment are already starting to be seen to open a new Holiday Inn around the Olympic Park. Two other
by owners. Our aim was to deliver between 3% and 7% RevPAR Holiday Inns will open next year in London as we prepare to
welcome guests in the run-up to the Games.
FACTS AND FIGURES
outperformance for relaunched hotels. Results are at the top
end of this target. RevPAR growth for US hotels relaunched for
Stay You.™
more than one year was 6 percentage points higher than those
we hadn’t relaunched. Global RevPAR is 5 percentage points In May 2010 we kicked off a $100 million global advertising
higher at relaunched hotels. campaign, inviting people to ‘Stay You’ or simply be themselves.
We advertised on TV for the first time in Germany and also
Growing our presence advertised across the US, UK, Canada, Latin America and
It has been a year of growth with Holiday Inn returning to Australia with print and digital campaigns in Mexico and Asia.
Hawaii and the opening of our first new-build in Mumbai, India. More details of our Great Wall of China activity can be seen
Holiday Inn Express launched in India, Singapore and Malaysia on page 31.
12 IHG Annual Review and Summary Financial Statement 2010
Staybridge Suites®
Like family
Our upscale properties offer guests who would like
an extended stay a choice of studio, one-bedroom or
two-bedroom/two-bath suites with fully equipped
kitchens and separate sleeping and work areas. We also
invite them to join our hotel teams and other guests
for social activities that make them feel comfortable,
making them feel like family.
Hotels in
Region Hotels Rooms pipeline
Americas 183 20,014 96
EMEA 5 748 5
Total 188 20,762 101
www.staybridgesuites.com
We love our guests to feel like family and our hotels to feel like home.
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now
Staybridge Suites Augusta, Georgia, US
k
you Suites teafmnds Our brand abroad
Did aybridge ve raisedllaus at Staybridge Suites has grown every year in the Americas since its launch in
St ha vi 1998. We’re also now offering our all-suite concept in international markets
ers four r ld
m emb plete he Wo . such as Cairo, Abu Dhabi, St. Petersburg, Liverpool and Newcastle. Following
to com Kids T lando
r
Give ge in O exciting new signings in 2010, our 101-strong pipeline will extend the brand
V illa in markets such as Kuwait and Lebanon. One of the highlights will be our
prominent position at the London 2012 Olympic Village in Stratford.
Times Square debut
In 2010 we made our debut in New York City’s Times Square. The property
is within walking distance of Manhattan’s hub, the Jacob Javits Convention
Centre, Broadway, Madison Square Gardens and Central Park.
Staybridge Suites also made its debut in Querétaro, central Mexico and
we opened five properties across the US, including Oklahoma City and
Seattle, Washington.
Great brands 13
Page header
Candlewood Suites® more on the web: www.ihgplc.com
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OVERVIEW
k
youood Suitersiced
Did Candlewrst mid-potel
fi h
th e s t ay y.
was tended ork Cit
Feel free ex ew
Y
in N
We love giving our guests all
the essentials they need for a
home-like stay at great value. We
give them room to be themselves
GREAT BRANDS
and are always there when they
need us.
At Candlewood Suites our guests want to feel
trusted and free to do what they want in their
own space. Our hotels offer spacious studio and
one-bedroom suites with fully equipped kitchens
and a large work area which our guests often
personalise to their liking. The Candlewood
Cupboard is open 24 hours and is the only
hotel convenience store which operates on
an honesty system.
HOW WE OPERATE
Hotels in
Region Hotels Rooms pipeline
Americas 288 28,253 120
Total 288 28,253 120
www.candlewoodsuites.com
Growth flows from Texas
Our US and Canada-based Candlewood Suites
brand added 13 new hotels in Texas during the
first six months of 2010. We are now open or
about to open in 50 locations in the State. In total,
35 Candlewood Suites opened in the year and our
WHERE WE OPERATE
pipeline remains bigger than any other brand in
the midscale extended stay segment of the market.
Habitat for Humanity
Candlewood Suites has sponsored 10 Habitat
for Humanity Home builds, creating home
ownership opportunities for low-income families.
The 10 completed homes are located across the
globe in Detroit, Michigan; Dallas and Houston,
Texas; Atlanta, Georgia; Alocqauca, Mexico;
and Karjat, India.
FACTS AND FIGURES
Candlewood Suites Hot Springs, Arkansas, US
14 IHG Annual Review and Summary Financial Statement 2010
Priority Club® Rewards
Our new look
Unleash the power of your points
The world’s first and largest hotel
loyalty programme, Priority Club
Rewards, offers members more ways
to earn and redeem points than any
other hotel scheme.
Our members have unparalleled levels of freedom
and choice, including our industry-leading Hotels
Anywhere scheme and the ability to get rewards
faster with Points & Cash.
56 million members
Over 600,000 new members every month
www.priorityclub.com
Value in loyalty
Priority Club Rewards is more than a loyalty
scheme. It’s a dynamic and international brand in
its own right. The scheme drives over 40% of our
total revenues by attracting guests to our hotels
and gaining their repeat business.
Incentives trigger growth
In 2010 the brand continued to grow as we added
almost eight million new members and generated
15% more revenue. Our greater flexibility was a key
attraction, allowing guests to redeem points at any
hotel, book airline tickets to anywhere in the world
or combine Points & Cash for other rewards.
By offering this freedom of choice, Priority Club
Rewards stands out in its market. Our members
know that:
• points never expire;
• rewards nights have no restricted dates;
• hotel, travel, merchandise and
entertainment rewards are also offered.
Attracting guests and owners
Guests love Priority Club Rewards. And our owners
see it as a huge attraction of our operating system.
This helps us to expand our estate in markets where
we know we can create demand. One example in
2010 was Holiday Inn’s return to Hawaii, one of the
most requested destinations by our members
(see page 27).
Developing an award-winning brand
Frequent travellers consistently vote Priority Club
Rewards as their favourite hotel loyalty programme.
The scheme has been named Best Hotel Rewards
Program in the World by Global Traveler magazine
readers for six consecutive years and Best Hotel
Loyalty Program by Business Traveler magazine
for four years in a row. In 2011 we will relaunch the
scheme with a fresh new look.
Great brands and How we operate 15
How we operate more on the web: www.ihgplc.com
Worldwide scale
Our operating system
OVERVIEW
Our global ‘system’ is the engine room of the business. It brings guests to our hotels and
persuades them to prefer our brands. It also drives hotel reservations and revenue for our
owners, a key reason why they choose to develop hotels with us. To make our scale really
count, we focus on the biggest markets and target our resources at opportunities that
will deliver the best returns. This has helped us grow our industry-leading share of the
global branded development pipeline.
System Fund
GREAT BRANDS
Annual fund Loyalty
totalling programme
Scale $1.1bn
4,437 hotels. Priority Club
Over 146 million Rewards, the
room nights largest in the
per annum industry, with
56 million
members
IHG’s system Web presence
Brand delivers
portfolio 11 local language
websites and one
7 hotel brands
covering all major
68% of the most active
segments of total rooms in industry on
the web
revenue
HOW WE OPERATE
Reservations
systems Sales force
10 call centres Global
Market sales team
around the world, coverage
covering 12 of more
languages Leadership than 8,000
positions in
15 of the 20 largest
hotel markets,
more than any
other company
WHERE WE OPERATE
Our business model
We run hotels in three ways: as a brand franchisor; a hotel manager of our brands; and
as brand owner. Our low-capital business model means we own only 15 of our hotels
today. Our focus is on franchising and managing hotels. More than 3,000 hotel owners
now choose our brands in over 4,400 hotels and over 640,000 rooms around the world.
Brand Marketing and Staff Ownership IHG capital IHG income
distribution
Franchised IHG IHG Third party Third party None Fee % of
This is the largest part of our rooms revenue
business: 3,783 hotels operate
under franchise agreements
FACTS AND FIGURES
Managed IHG IHG IHG usually Third party Low/none Fee % of total
We manage 639 hotels worldwide supplies general revenue plus
manager as a % of profit
minimum
Owned and leased IHG IHG IHG IHG High All revenues
We own 15 hotels worldwide and profits
(less than 1% of our portfolio)
16 IHG Annual Review and Summary Financial Statement 2010
How we operate
Our people
We have set out a clear Vision to become one of the world’s great
companies. Motivated and skilled people are essential to our success
because they bring our brands to life. Our people tell us they love
our brands, believe in our strategy and are proud to work for us.
This is allowing us to deliver consistently high standards of service
and higher revenues for hotel owners, says Tracy Robbins.
Brands at the heart of our business
Great brands are at the heart of everything we do. Our people are critical to our brand
success as their passion, values and skills are crucial to the guest experience. This
year we further equipped our people to support the brands through development of
our People Tools. These help us to hire, train, involve and recognise employees against
the values of each brand whether it’s Holiday Inn’s friendliness or InterContinental’s
understated service and style (see the brand pages 7 to 14). These tools were
developed for our owned and managed estate and received great feedback. Now
working in partnership with hotel owners and the IAHI, we will offer them to all our
hotels across the world.
“We’re not just a hotel business
providing rooms – we’re a people
business providing memorable
experiences for our guests in
100 countries and territories.
We attract and develop the best
people using our People Tools and
by creating a workplace in which
our people can be themselves and
are valued for their contributions.
When people love their jobs and
feel proud of where they work,
guest satisfaction increases and
we drive higher returns for owners.”
Tracy Robbins InterContinental New York Times Square, US
Executive Vice President,
Human Resources & Proud to work for IHG
Group Operations Support Our employee survey in October showed that more of our people than ever understand
our people strategy and love being part of IHG. Over 96,000 people sent us their views with
93% saying they are proud to work for us. Meanwhile, 91% of our people understand our
core purpose to create Great Hotels Guests Love. The survey also showed that our
people feel more engaged with the company than they did a year ago.
Working smarter
Ensuring our people have the right skills and knowledge gives us a competitive advantage.
This year we developed the IHG Way of Sales to build a common way of working across
the sales discipline, build sales capacity and drive hotel performance. This comprehensive
online training for hotels ranges from quality programmes to systems and revenue
management. Today, we offer more online learning experiences for our employees than
ever before, helping hotels control costs and reduce time away from the job.
Our people 17
more on the web: www.ihgplc.com
w?
u knoyee
d yoctober empl3o% of
Di ur O ecord 9 ey’re 2010 Awards
In o ey a r aid th s. • ‘Best 25 Big Companies’ to work for –
v s
sur eople rk for u
OVERVIEW
p o Sunday Times 2010
our d to w
u
pro • ‘Britain’s Most Admired Companies’ –
Leisure and Hotels 2007, 2008, 2009 and 2010
• ‘World’s ‘BEST’ Learning & Development Organisation’ –
American Society for Training and Development 2010
• ‘Innovation in Recruitment’ – Personnel Today 2010
Recruiting and developing talented people Edmond Tong: Events Operations Director, Winning Ways
We expect to open almost 1,300 hotels in the next few years. InterContinental Hong Kong
To deliver Great Hotels Guests Love we will need to recruit
GREAT BRANDS
around 160,000 people for our corporate offices and managed
hotels. There will also be even more opportunities available
in our franchised hotels.
We use our online recruitment system at www.ihg.jobs, as well
as our Academy partnerships (see page 22), in different regions Do the right thing
to match the right candidates against the right roles. Over
1.8 million people visited the site during 2010 and more than
a million potential candidates have expressed an interest in
working for us.
Our commitment to employees is to give them great training
and to regularly review their progress so everyone will fulfil Show we care
their potential.
HOW WE OPERATE
Aim higher
Great brands have great leaders
This year we launched the Leadership Academy for members of
our Leaders Lounge, an award-winning online community which
shares ideas and best practice techniques. The new Academy
gives our leaders the opportunity to invest time in comprehensive
15-20 minute online training programmes, available on-demand. Celebrate difference
WHERE WE OPERATE
Meanwhile, the Leaders Lounge continued the success of the
previous year with 88% of eligible employees visiting the site
each month.
The BEST place to learn InterContinental Shenzhen, China
The awards we win show that our People Tools are best in class
and that we are a great company to work for. Among our awards Work better together
this year, we were named the ‘World’s ‘BEST’ Learning &
Development Organisation’ by the American Society for Training These five
behaviours define
and Development. We were also named as a Sunday Times
how we work
‘Best 25 Big Companies’ to work for. together to create
Great Hotels
Celebrating Service
Guests Love.
FACTS AND FIGURES
A simple ‘thank you’ can go a long way. That was our experience
in July 2010 when around 3,000 hotels and offices celebrated
examples of great service. Simple thank you notes were written
by our colleagues worldwide and over 1,500 stories of great
service were celebrated. These ranged from the manager who
hosted a wedding for 130 people with an hour’s notice, to one
of our housekeepers who got a guest to a meeting on time Sharon
by washing and ironing a stained shirt in just ten minutes. Holiday Inn
18 IHG Annual Review and Summary Financial Statement 2010
How we operate
Global technology
The effective use of the best technology is essential to our Vision
of becoming one of the world’s great companies. We are taking the
industry lead in different areas, such as smartphone services, and
are increasingly patenting our inventions and building a reputation
as an innovative company.
Growing to meet demand
Technology systems are the foundation for efficient sales and distribution. Over the
past few years demand for technological solutions in all areas of our business has
grown massively. We are now handling approximately 15 billion interactions with our
business every year, more than twice the number three years ago. At the same time
we look to technology to help reduce IHG’s operating costs.
Innovating in the mobile space
Nothing demonstrates our ability to anticipate demand better than our pioneering
use of mobile and smartphone services. We were the first in our industry to introduce
a popular mobile booking website. This is now available in eight different languages.
We have added further innovations such as allowing mobile customers to check
availability and book rooms in nearby hotels as well as view local maps and directions.
The popularity of ‘location-based services’ is massive and gives us considerable
revenue opportunities. In December 2009 we achieved $400,000 in rooms revenue
from mobile bookings globally. By the following December we were achieving over
$3.6 million for the month. Euromonitor estimates that as many as 50% of the
European population will be using these types of services by 2015 and the global
picture is equally exciting. Together with other mobile offerings, such as our Priority
“We continually push the Club Rewards app (see opposite), we are well placed to differentiate ourselves in this
boundaries of technological competitive marketplace.
innovation to stay ahead in our
sector and meet the expectations
of our people, owners and guests.
We anticipate trends and are fast
to offer solutions. It means we
support our brands by making
our services more accessible and
attractive to guests. It also makes
our business easier to operate
and more efficient, supporting our
promise to create Great Hotels
Guests Love.”
Tom Conophy
Chief Information Officer
Mobile check-in
Holiday Inn has introduced cutting-edge technology to allow guests to unlock their
hotel room door with an audible tone from their mobile phone. Trialled at the Holiday
Inn Chicago O’Hare and the Holiday Inn Express Houston Convention Center, the
technology bypasses front desk check-in and has been very well received by guests.
We are now looking to expand the pilot test globally over the next 12 months.
Global technology 19
more on the web: www.ihgplc.com
?
k nown
you ere secontdoip
Did 010 we wonWeek’s were
In 2 rmati ies. We s a
Info mpan ised a y
co gn b
500 o reco mpany on
OVERVIEW
als 00 co rmati
1 o .
top ief Inf wards
h A
the C er 100
c
Offi
Searching for a beach hotel?
This year we introduced BOSS (Bottom-Up Optimized Search
Strategy), a patent pending technology that works behind the
scenes to revolutionise the way people search for hotels.
We are handling over 50 million of these searches every day.
GREAT BRANDS
BOSS turns conventional searching on its head. Traditionally,
guests are prompted to search for a specific property or dates,
repeating the search until they have narrowed down what they
are looking for.
BOSS will enable guests to determine their own search criteria,
whether a beach hotel or a major city, giving them the results
Priority Club Rewards app
they want quickly and easily. By the end of 2010, 30% of all IHG
room searches were undertaken by BOSS, with 100% planned
In April 2010, we launched a Priority Club
by the end of 2011.
Rewards app for the Apple iPhone which has
already been downloaded nearly 200,000 Along with improving search capabilities, BOSS is an important
times. And in July 2010, we launched the element in helping us build IHG’s reputation as a great company
Priority Club Rewards app for Google by creating industry-changing patentable inventions.
HOW WE OPERATE
Android phones.
Better customer targeting
Magic, the marketing tool that helps us tailor campaigns to
consumers, is producing great results for the business. This
year we used over 150 million guest profiles and 56 million
Priority Club Rewards members to produce more targeted
marketing campaigns.
Over the year, Magic campaigns generated $200 million in
revenue, as compared to $90 million in 2009. We are also using
Magic for a new initiative, Guest Connect. Three days before
their stay, guests are sent a pre-stay email with information
about the hotel they are visiting and our promotions. The system
WHERE WE OPERATE
allows hotels to select the most appropriate promotions for
Priority Club Rewards Free Nights campaign their location, enabling our people to give guests a more
personal service.
Unique guest services
InterContinental hotels are pioneers in their use of the latest
technology to deliver Great Hotels Guests Love. We are the
first hotel brand to offer destination-specific online concierge
services globally and this year launched our free Concierge
Insider Guides app. The app is designed specifically for the
Apple iPad and we are the first major hotel brand to make
such an app available.
Our guests have always enjoyed the local knowledge of our
FACTS AND FIGURES
concierge teams. With a simple download, our guests can now
prepare to enjoy a richer travel experience by tapping into the
collective knowledge of InterContinental concierge teams in
more than 140 destinations.
The concierge team at InterContinental
Hong Kong ready to use their iPads to
provide guests with local recommendations.
20 IHG Annual Review and Summary Financial Statement 2010
How we operate
Business reputation
A great corporate reputation is central to our ability to deliver
Great Hotels Guests Love. Whether corporate governance, risk
management, legal, health and safety, internal assurance or
corporate responsibility, our stakeholders rely on us to do the
right things.
Corporate governance
We are committed to maintaining the highest standards of global corporate
governance. We achieve this by providing the right leadership, strategic oversight,
knowledge tools and controls for our people so we fulfil all expectations, deliver
a trusted service for guests and continue to drive value for our shareholders.
Ultimate responsibility for having the necessary robust processes and policies
in place rests with the Board of Directors. Our Board has an excellent balance
of skills and experience, bringing together expertise in areas such as marketing,
hotel management, franchising, strategy, finance and remuneration.
The Board is supported by a range of Committees, including Audit, Remuneration,
Corporate Responsibility, Nomination and Disclosure, as well as the functional
teams of Global Internal Audit, Risk Management, Legal and Company Secretariat.
Responsible culture
Responsibility extends from the boardroom to every hotel guest room so we equip the
“Having a great business reputation
335,000 people who work in our hotels and corporate offices around the world to all
is a core asset. It helps us delight
live by our responsible business culture. We have embedded policies in our day-to-day
guests and attract shareholders.
operations, including our Code of Ethics and Business Conduct, Competition and
It’s also how we build trusting
Anti-Bribery policies. These are regularly and clearly communicated throughout
relationships with business
our business. As our Code of Ethics states, IHG’s reputation is built on the trust and
partners, maintain the confidence of
confidence of all our stakeholders. This underpins our determination to be one of the
the financial community and ensure
world’s great companies.
we’re an employer of choice.”
George Turner Management of risk
Executive Vice President, Having an accurate and up-to-date risk strategy is essential to managing our key
General Counsel risks. We continually review our Global Risk Register and agree actions to mitigate
and Company Secretary our current or emerging risks. The Risk Management team reports twice a year to
the Board, Executive and Audit Committees.
Members of our executive team and other senior management are responsible for
managing risk across our offices and hotels and for applying strategies, prioritising
awareness and delegating responsibility to cope with events that could undermine
the reputation of the Group and our brands. This involves, for example, safety and
security, protection of personal and sensitive data and making the most of our use
of third-party intermediaries.
Board insight
We make sure that our non-executive Board members have first-hand knowledge
of the challenges and opportunities we face in our business front-line. During the
year we held two non-executive visits to the Middle East and one to Atlanta, and we’ll
be hosting a tour of Greater China in 2011. Visits like this supplement the range of
business information we provide, ensuring Directors have up-to-date insight into
our expanding global business.
Business reputation and responsibility 21
more on the web: www.ihgplc.com
?
k nowd
you agementoan
Did risk manages on eudr
The ining p attract our
tra anet rom
intr 0 hits f year.
OVERVIEW
,00 st
187 ople la
pe
Hotel safety framework Staying safe
The Safe Hotel wheel below illustrates Providing our guests and visitors with an environment in which they feel safe
the groups of risks identified and actively and secure is the main focus of the Risk Management team. Our emphasis on
managed by IHG’s risk managers around the responsibility is core to promoting, maintaining and protecting the global reputation
world. The risk team work with hotels and of the business. The team manages safety and security risks and ensures that our
GREAT BRANDS
their management teams in order to minimise hotels comply with our own high standards, as well as local laws.
such risks and keep hotels safe and secure.
Our global standards have been recognised by the UK’s Chartered Institute of
Our holistic approach to risk means we are
Environmental Health (CIEH) which this year awarded us its first global corporate
able to maintain and develop management
membership. All our safety training, from Intermediate or Advanced Foundations
strategies to assess and control individual
types of risk. This has involved developing to online risk training sessions, will be accredited or endorsed by the CIEH. Graham
policies, standards and guidelines, raising Jukes, CIEH Chief Executive, described us as “a responsible corporate citizen – one
awareness and training staff on controls that puts the safety of its customers and employees at the centre of everything it does.”
and systems as well as reviewing and
reporting on progress. These management
activities are described on the Manage InterContinental Nanjing, China
Risk wheel below.
HOW WE OPERATE
CRISIS &
SECURITY INCIDENT
FIRE LEISURE
SAFETY SAFE SAFETY
HOTEL
GUEST FOOD
SAFETY SAFETY
STAFF
SAFETY
WHERE WE OPERATE
RISK POLICY &
PROFILE STANDARDS
Integrity of information
With operations as complex and global as ours, spanning 100 countries and
REVIEW WAYS OF
& REPORT
MANAGE
WORKING territories, robust privacy and data protection procedures are vital.
RISK
Our privacy programme is designed to keep customer information confidential.
RISK TRAINING
FINANCING & COMMS In addition to our own strategy in 2010 we began to roll out compliance to Payment
OPERATE Card Industry (PCI) data protection standards. This achieved PCI certification in our
& CONTROL
corporate offices, data centres and owned hotels. We are providing support and
expertise as well as encouragement for both the managed and franchised estate
to meet the same standards.
FACTS AND FIGURES
Dynamic assurance
Global Internal Audit plays an important role in protecting our reputation. The team,
via our dynamic risk assessment process (DRA), provides objective assurance and
advice by developing an informed assessment of the Group’s strategic and core risk
profile and focusing resource on audit testing where risk matters most. The DRA
was crucial in providing independent ongoing assurance to the Audit Committee
that appropriate controls were in place in 2010.
22 IHG Annual Review and Summary Financial Statement 2010
How we operate
Corporate responsibility
Corporate responsibility (CR) is integral to the way we do business.
Our focused approach helps us with our strategy to innovate and
collaborate with stakeholders. This helps us create economic
opportunities for communities and protect the environment.
It also allows us to manage costs, drive revenue and be
prepared for the future.
A good business proposition
Our approach sits at the We know that great companies care about the environment in which they operate.
heart of our business and is We also know that with over 4,400 hotels worldwide and almost 1,300 in the
championed at the highest development pipeline, we have a tremendous opportunity to make a difference. But
level by our Board of Directors, making a difference also makes good business sense. Our CR strategy focuses on
supported by our global the two areas where we can make the most difference: protecting the environment;
Corporate Responsibility and creating economic opportunities for our communities.
Committee, chaired by When we work with stakeholders to cut carbon emissions, for example, we do it not
Non-Executive Director, only because it is good for the environment but also to help us cut costs and drive
Jennifer Laing. value for shareholders. Similarly, when we open almost 1,300 hotels over the next
few years we will be investing in training and development for almost half a million
people. This will support local economies as well as help us to attract a talented
and committed workforce.
Innovation and collaboration
We achieve our business objectives by innovating and collaborating. A great example
is Green Engage, our online sustainability tool.
This industry-leading system allows hotels to track, measure and report on their
energy, water and waste. It enables hotels to identify significant cost savings and
reduce their environmental impacts without compromising the guest experience.
Since its launch in 2009, over 1,000 hotels and 2,000 individuals have registered to
use the system, creating a green community within IHG. The effectiveness of Green
Engage is also demonstrated by the fact that LEED (Leadership in Energy and
Environmental Design) now endorses the system.
Supporting our communities
With over 4,400 hotels in 100 countries and territories, we are well placed to lead
from the front in promoting responsible tourism. Through our new Community
Strategy, developed in 2010, we are continuing our efforts to generate local economic
opportunities, in particular through the IHG Academy.
Through Academy partnerships, we have joined forces with education providers and
community organisations to provide hospitality training and job opportunities in the
We have been awarded the Carbon communities where we operate. As well as creating jobs, the Academy partnerships
Trust Standard in the UK for are helping to ensure we find great people in places where skilled employees can be
showing real carbon reduction and hard to find. Involvement also gives our employees a chance to participate, make a
a commitment to ongoing reductions. difference and make sure we provide a consistent guest experience throughout
We also have plans in place for the the world.
UK’s Carbon Reduction Commitment. In China alone we have worked with 23 partners in 10 locations, training more
Our goal is to achieve energy savings than 4,800 students each year. We are now working towards similar partnerships
of between 6% and 10% in our owned in other countries.
and managed estate by 2012.
Responsible business 23
more on the web: www.ihgplc.com
? Joining forces
k ynowpany We have joined forces with some of the
youospitalirtofceosmionracless world’s leading organisations in our
Didthe only heeting P de ressou as mission to be a great company. Our
OVERVIEW
is M vi s collaborations include Business in the
IHG soring l to pro ting
n mee e. Community, the International Tourism
spo nationa make ossibl
o p Partnership and Harvard University to
Inter tools t ble as
and staina make improvements in areas ranging
su
from carbon emissions and conservation
to labour and community projects. We
have also sponsored Oxford University’s
Plant Diversity Research Project to help
us understand better how hotel design
and development impacts the environment.
GREAT BRANDS
Great partnerships UN Global Compact
Working together with National Geographic’s To support our responsible business strategy,
Centre for Sustainable Development, we we are one of the first hotel companies to Shelter in a storm
encourage a deeper appreciation of our world sign up to the UN Global Compact, the Hotels perform many functions. They
HOW WE OPERATE
and inspire a passion for its preservation. world’s largest corporate citizenship and are a place to celebrate, to do business
In September 2010, we launched our first sustainability initiative. This aligns our
and to provide opportunities for
InterContinental Responsible Business operations, culture and strategies with 10
Day, joining up the efforts of our 170 hotels to universally accepted principles in the areas
employment. When disaster strikes,
‘Make a World of Difference’. Activities ranged of human rights, labour, environment and they also provide shelter in a storm. We
from cleaning woods and parks to preserving anti-corruption. work with one of the world’s biggest aid
historical monuments so they can be enjoyed agencies to develop a rapid, cohesive
by our guests in years to come. response strategy, including guidelines
to help hotels make the best use of their
resources in times of disaster.
Green matters
Our research shows that many US and
WHERE WE OPERATE
UK travellers prefer socially responsible
hotels and are willing to pay for a greener
stay. With travellers expected to increase
from 903 million people in 2007 to
1.6 billion in 2020 (World Travel and
Tourism Council), it is confirmation that
our work to create green hotels is not
only good for the environment, but good
for our business.
FACTS AND FIGURES
The InterContinental New York Times Square opened in July 2010 with Mayor Michael Bloomberg
cutting a green vine to signify the hotel’s green credentials.
24 IHG Annual Review and Summary Financial Statement 2010
Where we operate
Around the world
IHG has over 4,400 hotels in 100 countries and
territories. Our brands are in 15 of the 20 largest
hotel markets in the world. When people travel,
they look for familiar brands they know from
home, increasing the demand for hotels that
operate under our brands around the world. Our
three operating regions are the Americas, Europe,
Middle East and Africa (EMEA), and Asia Pacific.
Americas
Hotels Rooms
InterContinental 56 19,120
Crowne Plaza 209 57,073
Holiday Inn 812 144,683
Holiday Inn Express 1,847 159,867
Holiday Inn Club Vacations 6 2,892
Hotel Indigo 35 4,254
Staybridge Suites 183 20,014
Candlewood Suites 288 28,253
Other 22 3,219
Total for Americas 3,458 439,375
Total development pipeline 890 102,509
find out more on page 26
Holiday Inn Chiangmai, Thailand
Around the world 25
more on the web: www.ihgplc.com
4,437 hotels globally
OVERVIEW
1,275 hotels in the pipeline
647,161 rooms globally
204,859 rooms in the pipeline
GREAT BRANDS
HOW WE OPERATE
WHERE WE OPERATE
Europe, Middle East and Africa Asia Pacific
Hotels Rooms Hotels Rooms
InterContinental 64 20,111 InterContinental 51 19,198
Crowne Plaza 98 22,941 Crowne Plaza 81 26,141
Holiday Inn 325 52,945 Holiday Inn 104 29,597
Holiday Inn Express 198 23,706 Holiday Inn Express 30 7,655
FACTS AND FIGURES
Hotel Indigo 2 110 Hotel Indigo 1 184
Staybridge Suites 5 748 Other 18 4,159
Other 2 291 Total for Asia Pacific 285 86,934
Total for EMEA 694 120,852 Total development pipeline 232 70,915
Total development pipeline 153 31,435 find out more on page 30
find out more on page 28
26 IHG Annual Review and Summary Financial Statement 2010
Where we operate
The Americas
The quality of our hotels, the strength of our brands and our great
people put us in exactly the right place to benefit from a sustainable
economic recovery. We enter 2011 in a position of strength, says
Jim Abrahamson.
Performance highlights
3 Regional performance
• Revenue per available room After a difficult 2009, we were cautious about the outlook for 2010. But signs of an
2 upturn came early in the second quarter with leisure trade improving through the year.
(RevPAR) up 4.9%
With the return of business bookings in the third and fourth quarters, occupancy over
• Revenue up 5% to $807m
the year grew 5.9%.
• Operating profit*
A welcome rise in revenue per available room (RevPAR) was in the crucial midscale
up 28% to $369m
1
market which accounts for almost 70% of all our rooms. Working with owners we were
*Before exceptional items
able to successfully relaunch Holiday Inn and encourage guests to stay more and pay
more (see page 11).
Number of rooms by business model Across all brands, and despite difficult economic conditions, we opened 194 new hotels
No. of Rooms and signed another 201. Holiday Inn signings were strongest with 49 new hotels, up
1. Franchised 392,536 4.3% on 2009. The strong results are testimony to the hard work and leadership
throughout our Americas team.
2. Managed 43,848
3. Owned & leased 2,991
890 102,509
3,458 439,375
Hotels in Rooms in
pipeline pipeline
Hotels Rooms
open open InterContinental New York Times Square, US
United States Quality hotels in quality markets, such as New York, Chicago and San
Francisco, led our performance. Having signed more deals with leading investors
than any hotel group, our share of the pipeline reached 20% against our current
market share of 8%. Our strategy to convert hotels to IHG brands has allowed us to
widen our portfolio. We re-entered the important Hawaii market with the Holiday Inn
Beachcomber Resort in Waikiki Beach and formed an InterContinental Alliance with
Las Vegas Sands Corp. to bring the Venetian and Palazzo resorts into our system.
In all, we opened 172 hotels and signed 165 more.
Canada The sub-prime lending crisis affected Canada far less than the US.
We opened 12 hotels and added 9 to the pipeline, increasing our pipeline and reach,
especially in major markets like Montreal and Toronto, where our performance
remained solid. We also signed our third Canadian Hotel Indigo, in Vancouver.
All IHG brands are well-positioned for future growth in this important market.
Latin America and Mexico With the opening of 10 hotels, we now have 194 hotels
in 21 countries and territories in Mexico and Latin America, and 68 in the pipeline.
We celebrated a milestone with Holiday Inn’s 40th Anniversary in Mexico. Crowne
Plaza and Staybridge Suites made their debuts in Querétaro, central Mexico.
In Latin America we opened a number of new hotels including the InterContinental
in Mendoza, Argentina, Holiday Inn Express Cuiaba in Brazil and Crowne Plaza
in San Salvador.
The Americas 27
more on the web: www.ihgplc.com
Speaking out for travel and tourism
OVERVIEW
It was an important year for public policy in the US. We played
an influential role in conjunction with the US Travel Association
in helping secure the Travel Promotion Act in March 2010. This
paved the way for the Corporation for Travel Promotion (CTP).
CTP will invest around $400 million in public-private funds to
encourage travel to the US. We also continued our work with
the American Hotel & Lodging Association (AHLA) and the US “Our confidence in our
Travel Association to successfully fight regulatory challenges strategy to build the
and put forward solutions to improve the inbound visitor quality of our hotels and
experience. increase market share
means we enter 2011 in
GREAT BRANDS
Buying together is better a position of strength.
We work with our Owners’ Association, the IAHI, to find ways to Our focus on guest
help owners improve the guest experience and run their hotels preference, performance
more profitably. In 2010 we launched InnSupply, a new web-based and profitability will
procurement plan for franchisees in the US and Canada. InnSupply continue.”
equips owners with the collective buying power of our system and Jim Abrahamson
the ability to buy hotel goods more efficiently. As Bill DeForrest President, The Americas
says on page 5, the savings to owners in dollars and time should
be significant.
The Venetian Resort Hotel, Las Vegas Waikiki Beach, Hawaii
HOW WE OPERATE
WHERE WE OPERATE
Venetian and Palazzo Aloha again, Hawaii
We were delighted to announce the Holiday Inn returned to Hawaii after
signing of a 10-year agreement with a short absence when the Waikiki
Las Vegas Sands Corp. to affiliate the Beachcomber Resort joined our system.
renowned Venetian and Palazzo with The resort, owned and managed by
InterContinental Hotels & Resorts. The Outrigger Enterprises, has been given
resorts offer our guests more than 6,800 a $30 million renovation and will be
luxurious all-suite rooms, as well as a major attraction for Priority Club
?
world-class entertainment and business
k now Rewards members.
youo was rasnhkoetdels in
facilities in one of the most requested
destinations for our 56 million Priority
Club Rewards members. Las Vegas Didhe PalazLzas Vega’s ‘World
T
FACTS AND FIGURES
Sands Corp. called the partnership ng re .
amo eisu 010
“a perfect marriage between two first vel & L ards’ 2
Tra est Aw
world-class resorts and one of the B
most prominent hotel companies
in the world”.
28 IHG Annual Review and Summary Financial Statement 2010
Where we operate
Europe, Middle East and Africa
New hotels and signings demonstrated the appeal of our brands
in existing and new markets, allowing us to continue to build
scale and grow our business, says Kirk Kinsell.
Performance highlights
3 Regional performance
• Revenue per available room Occupancy growth led our revenue per available room (RevPAR) recovery in 2010 while
2
(RevPAR) up 6.1% rate growth, the first for two years, began to emerge in the summer. This was driven by
business guests making a more regular comeback by the end of the year, particularly
• Revenue up 4% to $414m
in major cities like London.
• Operating profit* decreased
Higher guest spending in Holiday Inn and Holiday Inn Express hotels also boosted
2% to $125m
1 performance, with refreshed hotels posting RevPAR gains of 7.1%. In all we opened
*Before exceptional items
33 hotels and we have 153 hotels in our development pipeline across this diverse region.
Number of rooms by business model Signings
No. of Rooms As expected, our rate of openings slowed but our pipeline grew. We signed deals to open
Holiday Inn and Holiday Inn Express hotels in locations as diverse as Canary Wharf
1. Franchised 79,950
in London and Ekaterinburg in Russia. Meanwhile, we signed with partners to launch
2. Managed 39,456 Crowne Plaza in Istanbul, St. Petersburg and Amsterdam and have Hotel Indigo set to
debut in Madrid, Lisbon, Newcastle and Berlin over the next four years. We will also be
3. Owned & leased 1,446
opening our first Staybridge Suites in London at the Westfield Stratford City shopping
centre, the gateway to the Olympic Village, where we will also open a Holiday Inn.
United Kingdom The UK remains one of our fastest growing markets with 12 openings
153 in 2010 and 31 in the pipeline. New openings included the Holiday Inn Manchester-
31,435
694 MediaCityUK, where thousands of BBC employees will relocate and our second
120,852 Hotel Indigo in London, near Tower Bridge. Meanwhile, our biggest UK partner,
LRG, refreshed all its 57 Holiday Inn brand properties by the summer. This includes
the Kensington Forum in London, Europe’s largest Holiday Inn.
Germany and France RevPAR in Germany rose 18.4%, thanks to a recovery in
Hotels in Rooms in corporate bookings. We also enjoyed strong RevPAR performance in France of 9%.
pipeline pipeline Both markets were helped by government intervention to reduce VAT on hotel stays
Hotels Rooms to stimulate demand and create thousands of new jobs.
open open
Staybridge Suites Abu Dhabi – Yas Island, UAE
Middle East and Turkey We continued our leadership position in the Middle East.
We opened two hotels this year, including the region’s largest Holiday Inn Express, a
381-room property at Dubai Airport. The region’s GDP growth is outpacing the rest of
the world, offering great revenue opportunities. Our aim is to open another 38 Middle
East hotels by 2020. In Turkey, a new frontier and fast growing market for us, we
signed deals in Istanbul for two Holiday Inn Express hotels and a Crowne Plaza.
Europe, Middle East and Africa 29
?
k onow more on the web: www.ihgplc.com
youental Lnoenddwninner
DidterContians crow aveller’sr
n I e w ast Tr ard fo
L an N
P ark ondé List Aw Food’.
of C Gold tel for
0
201 t UK Ho
Reaching out to more owners ‘ Be s
OVERVIEW
We are keen to help owners improve the guest experience and
operate more efficiently, not least in struggling economies such
as Portugal, Italy, Greece and Spain.
In a bid to support franchisees and owners in diverse and
often challenging markets, we staged business performance
meetings in eight locations across the region. High on the
agenda were compliance with our brand standards; use of
our business tools; and issues of cost management.
These initiatives, alongside strong financial returns are helping “Our strategy has been to
us attract new owners. Under its EMEA Chairman Joep Peeters’ anticipate and take advantage
leadership, IAHI membership reached 86% in the region in of the upturn. We achieved this
GREAT BRANDS
2010, the highest figure globally. Joep called the achievement by signing the right deals in the
“a great success” at our biggest owners’ conference, which right locations with the right
took place in Cairo. owners, while also improving
the guest experience. We are
Taking tourism more seriously building a profitable future for
We are working with stakeholders including the British our owners and great hotels
Hospitality Association to help the UK Government develop its for our guests.”
tourism policy. Our key message is that our industry plays a Kirk Kinsell
major part in helping stimulate economic growth. Prime Minister, President, Europe,
David Cameron, has now recognised that every 0.5% increase in Middle East and Africa
the country’s 3.5% share of the world tourism market can add
£2.7 billion to the economy and more than 50,000 jobs.
HOW WE OPERATE
WHERE WE OPERATE
Crowne Plaza Copenhagen Towers,
Official Hotel Services Provider London 2012 Denmark
London 2012 Crowne Plaza guests go electric
Holiday Inn is being recognised on the world stage as official At the 366-room Crowne Plaza
Hotel Services Provider for the London 2012 Olympic and Copenhagen Towers, one of the world’s
Paralympic Games. We are playing a key role in the preparation greenest hotels, we took energy production
and running of the Games. As well as opening two hotels one step further by installing electricity-
overlooking the Olympic Park, a Staybridge Suites and a Holiday producing bicycles in the gym for guests
Inn, we will be providing accommodation in up to 39 UK locations to use. Anyone producing 10 watt hours
for the Olympic Torch Relay. We are also offering up to 120 of of electricity or more for the hotel was
FACTS AND FIGURES
our best people the once-in-a-lifetime opportunity to help the given a locally-produced complimentary
organising committee LOCOG manage the Athletes’ Village. meal. This encouraged guests not only
We have also offered our help to British athletes and their to get fit but also reduce their carbon
coaching staff and families to stay for free when they visit our footprint, saving electricity and money.
hotels around the world. And we will be supporting more than Crowne Plaza Copenhagen Towers is
15 aspiring athletes by providing them with the chance to gain a member of the UN Global Compact.
valuable work experience in our hotels across the world. We It has EU Green Building and Green
are looking forward to helping host around 250,000 Olympics- Key certification and aims to become
related guests in the run-up to the Games. carbon neutral.
30 IHG Annual Review and Summary Financial Statement 2010
w?
Where we operate ou as knovoted
id yHoliday Ianrnkwt Hoct’eflor
D 010 id-M e cifi he
In 2 st M ia P
a at t
‘ B e d in A s un n in g l l e r
n r ve
Bra th year ss Tra s.
d
th e 10 Busine c Awar
2 010 Pacifi
A sia
Asia Pacific
Our Asia Pacific business is comprised of two operations: Asia
Australasia and Greater China. In 2010 both teams focused on growth
opportunities and announced a number of exciting new hotel openings
and signings.
Asia Australasia
Asia Australasia enjoyed improvement in travel and tourism during 2010 with revenue
per available room (RevPAR) increasing by 5.6%. Corporate bookings and business
travel returned and major events, such as the Commonwealth Games in Delhi, contributed
to inbound tourism. We are poised to expand further in key markets in one of the world’s
fastest growing regions.
Crowne Plaza New Delhi Rohini, India
“We enjoyed a strong year and are
India promises room for growth
now set to increase our presence
in India and the emerging markets We have 12 hotels and nearly 50 years experience of working in India. A strong
in Indochina. The strength of our economy coupled with a rapidly expanding middle class means the country offers long-
brands and system, coupled with term growth potential. We aim to grow quickly with our current pipeline of 44 hotels.
favourable underlying economic During 2010 we signed six new properties with the Amrapali Group, who will launch the
conditions in the region, give us Holiday Inn Express brand in the country. This debut will help us meet demand for high
growth opportunities to create quality hotels in India’s limited service sector. We expect to be operating 150 hotels
more Great Hotels Guests Love.” by 2020 with the Holiday Inn brand family leading that growth.
Jan Smits New opportunities in Southeast Asia
Managing Director, We are now set to offer five brands in Bangkok by 2013. We opened Crowne Plaza
Asia Australasia Bangkok Lumpini Park in late 2010 and the city’s first Holiday Inn Express will welcome
guests by 2012, followed by Hotel Indigo in 2013. Emerging markets in Indochina, such
Holiday Inn Express gains territory
as Vietnam, also offer solid growth opportunities. This year we signed two new Holiday
Partnering with the Chee Swee Inn Resorts for prime beachfront locations in Vietnam’s top tourist destinations, Cam
Cheng group of companies we Ranh Bay and Phu Quoc.
launched Holiday Inn Express in
Singapore and Malaysia. Resorts poised to flourish
Singapore will also offer Southeast Home to some of the most desirable travel destinations, Asia Australasia supports
Asia’s largest Holiday Inn Express, a strong resort strategy. We have 10 new resorts in development across the region,
following a deal with RB Capital putting our brands on the map in some of the region’s most idyllic and culturally
Hotels for us to manage a new- rich locations. We will be adding the InterContinental Danang Resort and Holiday Inn
build 400-room property in the
central business district. Phuket Mai Khao Beach Resort to our current portfolio of resorts in French Polynesia,
Fiji, Thailand, Bali and the Maldives.
Asia Pacific 31
more on the web: www.ihgplc.com
232
70,915
Asia Pacific
Performance highlights Number of rooms by business model 285 86,934
OVERVIEW
• Revenue per available room No. of Rooms
(RevPAR) up 12.4%
1. Franchised 6,834
• Revenue up 24% to $303m
2. Managed 79,407 Hotels in Rooms in
• Operating profit* pipeline pipeline
up 71% to $89m 3. Owned & leased 693
Hotels Rooms
*Before exceptional items open open
Greater China
We were the first international hotel operator to enter China. We arrived in 1984 and today
GREAT BRANDS
enjoy a leadership position. We already have a business in mainland China generating over
US$1 billion in total gross revenue and we represent 14% of the branded hotel sector and
28% of the development pipeline. China’s economy is expected to expand significantly over
the coming years with the hotel sector becoming the world’s largest by 2025. This gives
us the opportunity to double our size over the next five years.
It was an exceptional year for us, thanks to the strength of the economy and our growth
strategy to develop the right brands in the right places with the right owners. We saw
significant RevPAR growth in 2010, averaging 25.8% for the year. We continued to grow
our presence in Beijing and Shanghai and now also have more than one brand operating
in many large secondary cities such as Chongqing, Chengdu, Guangzhou, Tianjin
and Suzhou.
Over the year we opened 24 hotels in 17 different cities, including six InterContinental and
HOW WE OPERATE
seven Crowne Plaza properties. We also agreed Asia Pacific’s first Hotel Indigo, Shanghai
on the Bund. We now have hotels in 44 cities across mainland China.
We also signed a multi-brand, multi-property deal with HNA Hotels & Resorts Group,
one of China’s fast emerging hotel companies. This adds 1,300 rooms to our development
pipeline. And having signed four deals at the Hotel Investment Conference Asia Pacific
we are set to open Hotel Indigo and Holiday Inn Express hotels in the coastal cities of
Taipei, Xiamen and Hong Kong.
We will have more than 300 hotels operating in China in five years time, reinforcing our
leadership in the region.
“The opportunity for us in Greater
‘Stay You’, Great Wall of China China is phenomenal. We are
WHERE WE OPERATE
long-established as the leading
international hotel operator in
the region and have built a broad
portfolio of strong brands in key
locations. We have set out plans
to double in size over the next
five years.”
Keith Barr
Managing Director,
Greater China
Shanghai welcomes the world
The new 400-room InterContinental
FACTS AND FIGURES
Shanghai Expo opened in April
in time to welcome over 73 million
Great Wall hosts ‘Stay You’ gallery
visitors to World Expo. Built right
The first photo exhibition ever staged at the Great Wall of China marked the start next to the World Expo Park in
of Holiday Inn’s global ‘Stay You’ campaign. We invited enthusiasts worldwide to Pudong, it is the closest world class
submit photos of people ‘being themselves’. Nearly 10,000 entries competed for pride hotel to the site. World Expo, which
of place. The panel of judges chose 100 winning photos to hang alongside the work lasted for six months, boosted
of 50 famous photographers from China and abroad. Another 300 photos went on RevPAR in our 23 hotels across the
display in 15 Chinese cities, including a special collection shot by Holiday Inn staff. city with some owners reporting
rises in excess of 100%.
32 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Summary financial statement
This Summary Financial Statement provides a commentary
on the performance of the Group for the financial year ended
31 December 2010.
Group results
Revenue increased by 5.9% to $1,628m and operating profit before exceptional items
increased by 22.3% to $444m during the 12 months ended 31 December 2010.
The 2010 results reflect a return to RevPAR growth in a recovering market, with an
overall RevPAR increase of 6.2% led by occupancy. Fourth quarter comparable
RevPAR increased 8.0% against 2009, including a 2.4% increase in average daily rate.
Over the full year average daily rate grew for the InterContinental and Holiday Inn
brands by 1.3% and 0.5% respectively.
In 2010 the InterContinental Buckhead, Atlanta and the Holiday Inn Lexington were
sold, with proceeds used to reduce net debt. These disposals result in a reduction in
owned and leased revenue and operating profit of $19m and $4m respectively
compared to 2009.
The ongoing focus on efficiency across the Group largely sustained underlying cost
reductions achieved in 2009. Regional and central overheads increased by $49m, from
$209m in 2009 to $258m in 2010, driven by incremental performance-based incentive
costs of $47m and charges of $4m relating to a self-insured healthcare benefit plan.
Richard Solomons
During 2010, the IHG global system remained in line with 2009 at 4,437 hotels (647,161
Chief Financial Officer and
rooms). Openings of 259 hotels (35,744 rooms) were driven, in particular, by continued
Head of Commercial Development
expansion in the US and China and offset the removal of 260 hotels (35,262 rooms).
The Global Finance team comprises a In Asia Pacific, demand for upscale brands (InterContinental, Crowne Plaza and Hotel
number of disciplines that support the Indigo) contributed 65% of total room openings in the region.
delivery of Great Hotels Guests Love.
The $1bn roll-out of the Holiday Inn relaunch is substantially complete, enabling the
The team not only ensures that the
consistent delivery of best-in-class service and physical quality in all Holiday Inn and
Group has a robust governance and
Holiday Inn Express hotels. By 31 December 2010, 2,956 hotels were converted globally
control framework around its financial
under the relaunch programme, representing 89% of the total estate.
systems and financial statements
but it also supports all areas of the At the end of 2010, the pipeline totalled 1,275 hotels (204,859 rooms). Signings of
business giving proactive and relevant 319 hotels (55,598 rooms) represent an increase in rooms signed from 2009 levels.
financial and strategic input. Demonstrating the continued demand for IHG brands globally, 50% of the rooms
Global Finance is continually pipeline is now outside the Americas region. There were 25 hotel signings (3,025
looking for ways to improve, with key rooms) for Hotel Indigo as it gains real momentum in Europe and Asia Pacific
initiatives being delivered through where, together, 12 hotels (1,456 rooms) were signed. IHG also entered into an
our Global Finance Transformation InterContinental Alliance relationship with the Las Vegas Sands Corp. to bring the
framework that includes a team 6,874 all-suite Venetian and Palazzo Resorts into the system in 2011.
dedicated to prioritising, reporting
and project managing a number Americas results
of multi-year projects. Key Revenue and operating profit before exceptional items increased by $35m to $807m
achievements in 2010 included: (4.5%) and $81m to $369m (28.1%) respectively.
• delivery of procurement efficiencies Franchised revenue increased by $28m to $465m (6.4%) and operating profit by $28m
across the business; to $392m (7.7%). Royalties growth was driven by RevPAR gains across all brands and
• an innovative finance education by 4.5% in total. Non-royalty revenues and profits remained flat on 2009, as real estate
programme with over 2,300 financing for new activity remained constrained.
employees taking over 15,000
Managed revenue increased by $9m to $119m (8.2%) in line with the RevPAR growth of
online training sessions;
7.5%. Operating profit increased by $61m to $21m from a $40m loss in 2009. The prior
• further consolidation and migration
year loss included a charge for priority guarantee shortfalls relating to a portfolio of
of finance processes to our
hotels. A provision for onerous contracts was established on 31 December 2009 and
business service centre in India;
further payments made during 2010 were charged against this provision. Excluding the
• implementation of new systems for
effect of the provision, managed operating profit increased by $3m, driven by RevPAR
financial and tax reporting; and
growth of 23.3% in Latin America.
• reviews of business processes to
highlight potential improvement
areas.
Summary financial statement 33
Owned and leased revenue declined by $2m to $223m (0.9%) Central results
OVERVIEW
and operating profit increased by $2m to $13m (18.2%). During 2010, net central costs increased by $35m from
Improving trading conditions led to RevPAR growth of 6.4%, $104m to $139m (33.7%). The movement was primarily driven
including 8.1% at the InterContinental New York Barclay. by an increase in performance-based incentive costs where no
payments were made on some plans in 2009.
EMEA results
Revenue increased by $17m to $414m (4.3%) and operating Other financial items
profit before exceptional items decreased by $2m to $125m Exceptional operating items of $15m consisted of gains of $35m
(1.6%). from the disposal of assets, including $27m profit on the sale of
Franchised revenue and operating profit decreased by $2m to the InterContinental Buckhead, Atlanta offset by an impairment
$81m (2.4%) and $1m to $59m (1.7%) respectively. Excluding the charge of $7m, severance costs of $4m and costs of $9m to
impact of $3m in liquidated damages received in 2009, revenue complete the Holiday Inn brand family relaunch.
GREAT BRANDS
and operating profit increased by 1.3% and 3.5% respectively. Compared with the previous year, exceptional operating items
The underlying increase was driven by RevPAR growth of 7.6% were significantly lower as 2009 was impacted by difficult
across the franchised estate. trading which resulted in exceptional costs of $373m, largely
EMEA managed revenue increased by $11m to $130m (9.2%) down to the recognition of impairment charges, an onerous
and operating profit decreased by $3m to $62m (4.6%). Positive contract provision and the cost of office closures.
RevPAR growth in key European cities and markets, including Net financial expenses increased from $54m in 2009 to $62m
growth of 14.8% in IHG’s managed properties in Germany, was in 2010, as the effect of the £250m 6% bond offset lower net debt
offset by unfavourable trading across much of the Middle East levels and low interest rates. Average net debt levels in 2010
where RevPAR declined overall by 0.7%. At the year end, a were lower than 2009 primarily as a result of improved trading,
provision of $3m was made for future estimated cash outflows the disposal of the InterContinental Buckhead, Atlanta and a
relating to guarantee obligations for one hotel. continuing focus on cash.
In the owned and leased estate, revenue increased by $8m to The effective rate of tax was 26% (2009 5%).
HOW WE OPERATE
$203m (4.1%) and operating profit increased by $7m to $40m
Basic earnings per ordinary share in 2010 was 101.7¢, compared
(21.2%). RevPAR growth of 11.9% benefited from average daily
with 74.7¢ in 2009. Adjusted earnings per ordinary share was
rate growth of 6.5% across the year. The InterContinental
98.6¢, against 102.8¢ in 2009.
London Park Lane and InterContinental Paris Le Grand
delivered strong year-on-year RevPAR growth of 15.0% and The Board has proposed a final dividend per ordinary share of
11.5% respectively. 35.2¢ (22.0p). With the interim dividend per ordinary share of
12.8¢ (8.0p), the full-year dividend per ordinary share for 2010
Asia Pacific results will total 48.0¢ (30.0p).
Asia Pacific revenue and operating profit before exceptional
Capital structure and liquidity management
items increased by $58m to $303m (23.7%) and by $37m to
$89m (71.2%) respectively. In 2010, the Group continued its focus on cash management.
During the year, $462m of cash was generated from operating
Continued strong economic growth in the region was given a
WHERE WE OPERATE
activities and overall, net debt decreased by $349m to $743m.
further boost by the World Expo held in Shanghai from May to
October 2010. Resulting RevPAR growth in key Chinese cities In December 2009, the Group issued a seven-year £250m public
was exceptional, with Shanghai and Beijing growing 55.9% and bond, at a coupon of 6%, which was initially priced at 99.465% of
29.9% respectively. face value.
Franchised revenue increased by $1m to $12m (9.1%) and
operating profit grew by $2m to $7m (40.0%).
Managed revenue increased by $50m to $155m (47.6%) and
operating profit increased by $29m to $73m (65.9%). In addition
to strong comparable RevPAR performance, there was a This Summary Financial Statement was approved by the Board
positive contribution from recently opened hotels, with a 9% on 14 February 2011 and signed on its behalf by Richard Solomons.
room increase in the size of the Asia Pacific managed estate It does not contain sufficient information to provide as complete
during the year following a 10.0% increase in 2009, and a $4m an understanding of the Group’s results and state of affairs as that
FACTS AND FIGURES
operating profit benefit due to the collection of old or previously provided in the Annual Report and Financial Statements 2010. That
provided for debts. report may be obtained, free of charge, by writing to IHG or the
Company’s Registrar, Equiniti (contact details are provided on
In the owned and leased estate, revenue increased by $7m to page 45).
$136m (5.4%) and operating profit by $5m to $35m (16.7%).
These results were driven by the InterContinental Hong Kong, The auditors have issued an unqualified report on the financial
where RevPAR increased 15.3% during the year. statements containing no statement under Section 498(2) or 498(3)
of the Companies Act 2006.
Information concerning Directors’ emoluments is shown on
pages 40 to 43.
34 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Summary financial statement continued
Independent auditor’s statement to the members
of InterContinental Hotels Group PLC
We have examined the Summary Financial Statement for the year ended Headlines, Chairman’s Statement, Chief Executive’s Review, Business Reviews,
31 December 2010 which comprises the Group income statement, Group Summary Directors’ Report, Corporate Governance Statement, Summary Audit
statement of cash flows and Group statement of financial position. Committee Report and Summary Remuneration Report.
This statement is made solely to the Company’s members, as a body, in We conducted our work in accordance with Bulletin 2008/3 issued by the Auditing
accordance with Section 428(4) of the Companies Act 2006. Our audit work has Practices Board. Our report on the Company’s full annual financial statements
been undertaken so that we might state to the Company’s members those matters describes the basis of our opinion on those financial statements, the Directors’
we are required to state to them in an auditor’s statement and for no other purpose. Remuneration Report and the Directors’ Report.
To the fullest extent permitted by law, we do not accept or assume responsibility Opinion
to anyone other than the Company and the Company’s members as a body, for our
In our opinion the Summary Financial Statement is consistent with the full annual
audit work, for this statement, or for the opinions we have formed.
financial statements, the Directors’ Report and the Directors’ Remuneration
Respective responsibilities of Directors and the auditor Report of InterContinental Hotels Group PLC for the year ended 31 December 2010
The Directors are responsible for preparing the Annual Review and Summary and complies with the applicable requirements of Section 428 of the Companies
Financial Statement in accordance with applicable United Kingdom law. Act 2006, and the regulations made thereunder.
Our responsibility is to report to you our opinion on the consistency of the Summary Ernst & Young LLP Statutory Auditor London 14 February 2011.
Financial Statement within the Annual Review and Summary Financial Statement Directors’ statement
with the full annual financial statements, the Directors’ Remuneration Report and
The auditor has issued unqualified reports on the full annual financial statements,
the Directors’ Report, and its compliance with the relevant requirements of Section
the auditable part of the Directors’ Remuneration Report and on the consistency
428 of the Companies Act 2006 and the regulations made thereunder.
of the Directors’ Report with those annual financial statements. Their report
We also read the other information contained in the Annual Review and Summary on the full annual financial statements and the auditable part of the Directors’
Financial Statement and consider the implications for our report if we become Remuneration Report contained no statement under Sections 498(2) or 498(3)
aware of any apparent misstatements or material inconsistencies with the of the Companies Act 2006.
Summary Financial Statement. The other information comprises only the
Group income statement
2010 2009
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
For the year ended 31 December 2010 $m $m $m $m $m $m
Revenue
Americas 807 – 807 772 – 772
EMEA 414 – 414 397 – 397
Asia Pacific 303 – 303 245 – 245
Central 104 – 104 124 – 124
Total revenue 1,628 – 1,628 1,538 – 1,538
Operating profit/(loss)
Americas 369 14 383 288 (301) (13)
EMEA 125 3 128 127 (22) 105
Asia Pacific 89 (2) 87 52 (7) 45
Central (139) – (139) (104) (43) (147)
Operating profit/(loss) 444 15 459 363 (373) (10)
Net finance costs (62) – (62) (54) – (54)
Profit/(loss) before tax 382 15 397 309 (373) (64)
Tax (98) (8) (106) (15) 287 272
Profit for the year from
continuing operations 284 7 291 294 (86) 208
Profit for the year from discontinued operations – 2 2 – 6 6
Profit for the year 284 9 293 294 (80) 214
Earnings per ordinary share (cents)
Basic – continuing operations 101.0 72.6
Adjusted – continuing operations 98.6 102.8
Basic – total operations 101.7 74.7
Adjusted – total operations 98.6 102.8
Dividend per share (cents)
Final – paid in respect of prior year 29.2 29.2
Interim paid 12.8 12.2
Final – proposed 35.2 29.2
Summary financial statement 35
Group statement of cash flows
OVERVIEW
2010 2009
For the year ended 31 December 2010 $m $m
Cash flow from operations 583 484
Net interest paid (57) (51)
Tax paid on operating activities (64) (1)
Net cash from operating activities 462 432
Capital expenditure (95) (148)
Proceeds from disposal of operations, associates and other financial assets 135 35
Tax paid on disposals (4) (1)
Dividends paid to shareholders (121) (118)
Decrease in borrowings (292) (249)
GREAT BRANDS
Other financing movements (34) 5
Net movement in cash and cash equivalents in the year 51 (44)
Cash and cash equivalents at beginning of the year 40 82
Exchange rate effects (13) 2
Cash and cash equivalents at end of the year 78 40
Group statement of financial position
2010 2009
31 December 2010 $m $m
ASSETS
Property, plant and equipment 1,690 1,836
Goodwill 92 82
HOW WE OPERATE
Intangible assets 266 274
Investment in associates 43 45
Retirement benefit assets 5 12
Other financial assets 135 130
Deferred tax assets 79 95
Total non-current assets 2,310 2,474
Inventories 4 4
Trade and other receivables 371 335
Current tax receivable 13 35
Cash and cash equivalents 78 40
Other financial assets – 5
Total current assets 466 419
WHERE WE OPERATE
Total assets 2,776 2,893
LIABILITIES
Loans and other borrowings (18) (106)
Derivative financial instruments (6) (7)
Trade and other payables (722) (668)
Provisions (8) (65)
Current tax payable (167) (194)
Total current liabilities (921) (1,040)
Loans and other borrowings (776) (1,016)
Derivative financial instruments (38) (13)
Retirement benefit obligations (200) (142)
Trade and other payables (464) (408)
Provisions (2) –
FACTS AND FIGURES
Deferred tax payable (84) (118)
Total non-current liabilities (1,564) (1,697)
Total liabilities (2,485) (2,737)
Net assets 291 156
IHG shareholders’ equity 284 149
Non-controlling interest 7 7
Total equity 291 156
36 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Our senior leadership team
Non-Executives
David Webster Ralph Kugler Ying Yeh
Non-Executive Chairman* Non-Executive Director° Non-Executive Director †
Chairman of the Nomination Committee Chairman of the Remuneration Committee Appointed a Director in December 2007.
Appointed a Director in April 2003. Appointed a Director in April 2003. Vice President and Chairman, Greater
Appointed Non-Executive Chairman Chairman of Byotrol plc, a Non-Executive China Region, Nalco Company. Previously
in January 2004. Also Non-Executive Director of Discovery Group Holdings Ltd, Chairman and President, North Asia
Chairman of Makinson Cowell Limited, a Director of Spotless Holding Sas, Board Region, President, Business Development,
a Non-Executive Director of Amadeus Adviser at Mars, Incorporated, and Senior Asia Pacific Region and Vice President,
IT Holding SA and a Director of Temple Adviser to 3i plc. Formerly an Executive Eastman Kodak Company. Also a Non-
Bar Investment Trust PLC. Formerly Director of Unilever PLC and Unilever N.V. Executive Director of AB Volvo. Age 62.
Chairman of Safeway plc. Age 66. Age 54.
* A Non-Executive Director and a member
David Kappler Jennifer Laing of the Nomination Committee
Senior Independent Non-Executive Director # Non-Executive Director • # An independent Non-Executive Director
Chairman of the Audit Committee Chairman of the Corporate and a member of the Audit, Remuneration
Appointed a Director and Senior Responsibility Committee and Nomination Committees
• An independent Non-Executive Director
Independent Director in June 2004. He Appointed a Director in August 2005. Has
is also a Non-Executive Director of Shire plc. and a member of the Audit, Nomination
over 30 years’ experience in advertising and Corporate Responsibility Committees
Formerly Chief Financial Officer of Cadbury and was, until 2007, Associate Dean,
Schweppes plc and Non-Executive ° An independent Non-Executive Director
External Relations at London Business and a member of the Audit, Remuneration,
Chairman of Premier Foods plc. A member School. Also serves as a Non-Executive Nomination and Corporate Responsibility
of the Trilantic Europe Advisory Council. Director of Hudson Highland Group, Inc. Committees
Age 63. Age 63. † An independent Non-Executive Director
and a member of the Remuneration and
Graham Allan Jonathan Linen Nomination Committees
Non-Executive Director • Non-Executive Director† ‡ A member of the Executive Committee
Appointed a Director in January 2010. Appointed a Director in December 2005. § Not a main Board Director
Chief Executive Officer of Yum! Restaurants Was formerly Vice Chairman of the
International (YRI), a subsidiary of Yum! American Express Company. Serves as a
Brands, Inc. Previously President of YRI Non-Executive Director of Yum! Brands,
from 2003 to 2010. Age 55. Inc. and of Modern Bank, N.A., and on
a number of US Councils and advisory
boards. Age 67.
From left to right: Graham Allan, David Webster, Jonathan Linen, Ying Yeh, David Kappler, Ralph Kugler, Jennifer Laing, James Abrahamson,
Our senior leadership team 37
Executives
OVERVIEW
Andrew Cosslett Kirk Kinsell Richard Solomons
Chief Executive ‡ President, EMEA ‡ Chief Financial Officer and
Appointed Chief Executive in February Appointed a Director in August 2010. Head of Commercial Development ‡
2005. Previously at Cadbury Schweppes Joined the Group in 2002. Appointed Joined the Group in 1992. Responsible
plc, where he was most recently President, President, EMEA and an Executive for corporate and regional finance, Group
Europe, Middle East & Africa. Serves Committee member in 2007. Responsible financial control, strategy, investor
on the Executive Committee of the for the business development and relations, tax, treasury, commercial
World Travel & Tourism Council and the performance of all the hotel brands and development and procurement. Age 49.
President’s Committee of the CBI. Age 55. properties in the EMEA region. Age 56.
George Turner
James Abrahamson Tracy Robbins Executive Vice President,
President, The Americas ‡ Executive Vice President, Human Resources General Counsel and Company Secretary ‡§
Appointed a Director in August 2010. & Group Operations Support‡§ Joined the Group in September 2008
Joined the Group as an Executive Joined the Group in December 2005
GREAT BRANDS
from Imperial Chemical Industries PLC.
Committee member with responsibility from Compass Group PLC. Responsible Appointed Executive Vice President,
for the Americas Region in January for global talent management, leadership General Counsel and Company Secretary
2009 from Global Hyatt Corporation. development, reward strategy, in January 2009. Responsible for
Responsible for the business development organisational capability and operations corporate governance, risk management,
and performance of all the hotel brands support. Age 47. insurance, data privacy, internal audit,
and properties in the Americas region. company secretariat, legal and corporate
Age 55. Tom Seddon responsibility & public affairs. Age 40.
Executive Vice President and
Tom Conophy Chief Marketing Officer ‡§ In addition, IHG has a strong management
Executive Vice President and Having served in senior positions with team who report into the IHG Senior
Chief Information Officer ‡§ IHG’s predecessor companies until 2004, Leadership Team. Jan Smits is Managing
Joined the Group in February 2006 from rejoined the Group in 2007 from SUBWAY®. Director, Asia Australasia, and Keith Barr
Starwood Hotels & Resorts International. Responsible for worldwide brand is Managing Director, Greater China, both
Responsible for global technology, management, global sales, marketing reporting directly to Andrew Cosslett
HOW WE OPERATE
including IT systems and information and loyalty programmes. Age 42. who has overall responsibility for the
management throughout the Group. Asia Pacific region.
Age 50.
WHERE WE OPERATE
FACTS AND FIGURES
Tom Seddon, Tom Conophy, Kirk Kinsell, Andrew Cosslett, Tracy Robbins, Richard Solomons and George Turner.
38 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Summary Directors’ report
Activities of the Group
The principal activities of the Group are in hotels and resorts, with Details of the beneficial share interests of Directors who were on
franchising, management, ownership and leasehold interests in the Board at the year end are shown below.
over 4,400 establishments, with more than 640,000 guest rooms in
100 countries and territories around the world. 31 December 2010
InterContinental Hotels Group PLC
A review of the performance of the Group is contained in the ordinary shares
Chairman’s statement and the Chief Executive’s review on pages Executive Directors
3 to 5, the reviews presented on pages 6 to 31 and in the Summary James Abrahamson 52,203
Financial Statement on pages 32 to 35.
Andrew Cosslett 496,133
Results and dividends Kirk Kinsell 63,1361
The operating profit before exceptional items was $444m. An interim Richard Solomons 171,522
dividend of 8.0p per share was paid on 1 October 2010. The Directors Non-Executive Directors
are recommending a final dividend of 22.0p per share to be paid on Graham Allan 2,000
3 June 2011 to shareholders on the Register at close of business David Kappler 1,400
on 25 March 2011. Ralph Kugler 1,169
Jennifer Laing 3,998
Share capital
Jonathan Linen 7,3432
At 31 December 2010, the Company’s issued share capital consisted
David Webster 34,905
of 289,472,651 ordinary shares of 1329⁄47p each. There are no special
Ying Yeh –
control rights or restrictions on transfer attaching to these
ordinary shares. 1 62,499 ordinary shares and 637 American Depositary Receipts.
2 Held in the form of American Depositary Receipts.
During the year, no awards or grants over shares were made that
would be dilutive of the Company’s ordinary share capital.
Share repurchases Employees
No shares were purchased or cancelled under the authority IHG directly employed an average of 7,858 people worldwide during
granted by shareholders at the Annual General Meeting held on 2010, whose costs are borne by the Group. When the whole IHG
28 May 2010. The share buyback authority remains in force until estate is taken into account, approximately 335,000 people are
the Annual General Meeting in 2011, and a resolution to renew employed globally across IHG’s brands. The Group is committed to
the authority will be put to shareholders at that Meeting. providing staff with equality of opportunity, without discrimination.
Great emphasis is placed on employee communications, particularly
Substantial shareholdings on matters relating to the Group’s business and its performance.
As at 14 February 2011, the Company had been notified of the Donations
following significant holdings of voting rights in its ordinary shares:
During the year, the Group donated $1,650,000 in support of
community initiatives and charitable causes. This figure includes
Cedar Rock Capital Limited 5.07% Direct interest
contributions from IHG employees and guests. No payments
BlackRock, Inc. 5.02% Indirect interest were made for political purposes.
Capital Research and
Management Company 5.02% Indirect interest Auditors
Legal & General Group plc 3.96% Direct interest The Directors confirm that they have taken steps to make
themselves aware of relevant audit information. None of the
Directors is aware of any relevant audit information which has
Directors not been disclosed to the auditors.
Details of current Board members are shown on pages 36 and 37. The reappointment of Ernst & Young LLP as auditors of the
Executive Directors have service contracts and Non-Executive Company will be put to members at the Annual General Meeting.
Directors have letters of appointment.
The Board may exercise all the powers of the Company. The Group Annual General Meeting
maintains insurance cover for and has provided indemnities to its The Notice of the Annual General Meeting to be held at 11.00am on
Directors and officers, as permitted by the Companies Act 2006. Friday, 27 May 2011 is contained in a circular sent to shareholders
at the same time as this Review.
Going concern
At the end of 2010, the Group was trading comfortably within its
banking covenants and debt facilities. IHG’s fee-based model and
wide geographic spread means that it is well placed to manage
through uncertain times.
The financial statements for the year ended 31 December 2010
have therefore been prepared on the going concern basis.
Summary Directors’ report and Corporate governance 39
Corporate governance
Combined Code compliance
OVERVIEW
The Board is committed to compliance with the principles set out It was concluded that the Board as a whole operates in an effective
in the Combined Code on Corporate Governance (Combined Code) manner, and that each Director continues to make an effective
and considers that the Company has complied with its requirements contribution and retains a strong commitment to the role. The work
throughout the year ended 31 December 2010. of each main Committee was also considered to be effective.
A revised UK Corporate Governance Code (the new UK Code) Although IHG is not yet subject to the recommendation of the new
has been introduced for financial years beginning on or after UK Code that all Directors submit themselves for re-election by
29 June 2010. IHG will report on its compliance with the new shareholders annually, the Company is adopting this practice with
UK Code as part of its 2011 Corporate Governance statement. effect from its next Annual General Meeting in May 2011.
Control environment Senior Independent Director
The Board is responsible for the Group’s system of internal control David Kappler was Senior Independent Director throughout the
GREAT BRANDS
and risk management and for reviewing its effectiveness. In order year. His role includes being available to liaise with shareholders
to discharge that responsibility, the Board has established the who have issues to raise.
procedures necessary to apply the Combined Code, including clear
operating procedures, lines of responsibility and delegated authorities. Company Secretary
For the year ended 31 December 2010, the Board has conducted a All Directors have access to the advice and services of the Company
review of the effectiveness of the system of risk management and Secretary. His responsibilities include advising the Board on
internal control. The system is designed to manage, rather than corporate governance, and for ensuring good information flows to
eliminate, the risk of failure to achieve business objectives and it the Board and its Committees and between senior management
can only provide reasonable and not absolute assurance against and the Non-Executive Directors. He also facilitates the induction
material misstatement or loss. Whilst areas for improvement have of new Directors.
been identified and actions initiated, no significant shortcomings Shareholder relations
have been identified from the annual assessment.
HOW WE OPERATE
The Group reports formally to shareholders twice a year and
Board and Committees releases quarterly results. In addition, regular meetings are held
The Board is responsible to the shareholders for the strategic with major institutional shareholders to discuss progress of the
direction, development, performance and control of the Group. business, its performance, plans and objectives. The Chairman, the
It also ensures that the necessary financial and human resources Senior Independent Director and other Non-Executive Directors are
are in place for the Group to meet its objectives. There are eight available to meet with major shareholders to discuss governance
regular Board meetings a year and further meetings are held and strategy, and to understand any issues and concerns.
as needed. The Annual General Meeting provides an additional useful
David Webster was Non-Executive Chairman throughout the year. opportunity to meet private shareholders and answer their
In addition, a team of six experienced independent Non-Executive questions. Information of interest to investors is also maintained
Directors represent a strong source of advice and judgement. on the Company’s website at www.ihgplc.com/investors
Induction programmes are prepared for new Directors and ongoing
WHERE WE OPERATE
training needs for all Directors are kept under review. Summary Audit Committee report
In addition to the Executive Committee, the following are the The Audit Committee, which is chaired by a financial expert,
main Committees of the Board: Audit Committee; Remuneration supports the Board in meeting its responsibilities in relation to
Committee; Nomination Committee; and Corporate Responsibility the integrity of the Group’s financial statements and associated
Committee. The Audit, Remuneration, Nomination and Corporate announcements, the adequacy of internal control and risk
Responsibility Committees consist wholly of Non-Executive management systems and the appointment and work of the
Directors. The Chairman of the Company is a member of the internal and external auditors. The external auditor and the
Nomination Committee only. The terms of reference of these Head of Global Internal Audit both have the opportunity to meet
Committees were reviewed during 2010 to ensure that they privately with the Committee.
continue to reflect best practice, and are available on the During the year, the Committee’s deliberations included a wide
Company’s website at www.ihgplc.com/investors under corporate range of matters addressing all its main areas of responsibility.
governance/committees, or from the Company Secretary’s office The Committee’s main focus was to review the quarterly, interim
on request. and full-year financial results and to review the effectiveness
FACTS AND FIGURES
Performance evaluations of the Board, of each main Committee of internal control, financial reporting and risk management
and of individual Directors were undertaken for 2010. These processes, through reports and presentations received from
involved completion of comprehensive questionnaires and the internal audit, the external auditors and management.
Chairman having discussions with each Director individually. Consideration was also given to tax risk, policies and initiatives,
global technology strategy, treasury matters and the funding
position of the Group’s main pension plan.
40 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Summary remuneration report
Introduction Remuneration elements
The Summary Remuneration Report is extracted from Base salary and benefits
information from the full Remuneration Report contained in Salary is reviewed annually, based on individual performance,
the Annual Report and Financial Statements 2010, a copy of competitive market data, comparator company analysis, internal
which is available on request and can be viewed on the Company’s relativities and salary levels in the wider employment market.
website at www.ihgplc.com/investors under financial library. The Benefits are provided in accordance with local market practice. Only
Remuneration Report will be put to the vote at the forthcoming base salary is pensionable. The Executive Directors’ salaries are:
Annual General Meeting.
2011 2010
Market conditions Directors £ £
Andrew Cosslett 850,780 826,000
The year started with significant uncertainty and volatility in the
James Abrahamson 477,117 469,348
economic environment. However, market conditions improved
progressively throughout the year as consumer confidence Kirk Kinsell 477,117 462,875
strengthened. Global revenue per available room (RevPAR) grew Richard Solomons 540,000 523,000
by 6.2% and room rates now show positive growth in all regions.
Annual Bonus Plan
Reflecting IHG’s results, bonus outcomes in 2010 were 175% of
base salary. Awards under the ABP require the achievement of challenging
personal and corporate performance goals before target bonus of
Robust links between performance and reward were maintained
115% of salary is payable. Half of any bonus earned is compulsorily
in 2010 incentive plan designs and a number of safeguards were
deferred in the form of shares for three years. No matching shares
put in place, reflecting continuing uncertainty in the industry.
are awarded by the Company.
Maximum bonus opportunity was temporarily capped at 175%
of base salary and the target for maximum bonus achievement was
temporarily increased to 120% for earnings before interest and tax 50%
70% Deferred
(EBIT). Under the 2010/2012 Long Term Incentive Plan (LTIP) cycle, Annual Shares
EBIT
the total shareholder return (TSR) and earnings per share (EPS) Bonus
measures were restored to equal weighting. Salaries were for 2011 50%
increased by an average of 2.8%, following no increase in 2009. 30% Cash
Individual
Following review, the Remuneration Committee has concluded
Performance Structure
that for the 2011/2013 LTIP cycle the EPS measure should be measures
replaced with two equally weighted new measures – net Rooms
Long Term Incentive Plan
growth and like-for-like RevPAR growth compared with major
competitors. These measures underpin IHG’s strategy and have The LTIP allows Executive Directors and eligible management to
high relevance for most employees. The existing TSR measure receive share awards, subject to the achievement of performance
remains. The maximum bonus opportunity for 2011 will be conditions, measured over a three-year period. Awards are made
increased to 200% of base salary and the EBIT target under annually and, other than in exceptional circumstances, will not
the Annual Bonus Plan (ABP) will revert to 110% of budget. exceed three times annual salary for Executive Directors.
The Committee believes that these targets are well aligned The LTIP three-year cycle ending 31 December 2010 resulted
with our goal of increasing shareholder value. in 73.8% vesting for the Executive Directors.
The performance conditions for the 2011/2013 LTIP cycle are:
Remuneration policy
• IHG’s TSR relative to the Dow Jones World Hotels index
For Executive Directors and for senior executives, the following
(half of the potential maximum award);
policy has been applied and will apply in future years.
• cumulative annual net growth in rooms over the period
Overall remuneration is intended to attract and retain high-quality
(one quarter of the potential maximum award); and
executives, reward achievements aligned with business targets
and key strategic objectives, align executive and shareholder • cumulative annual like-for-like RevPAR growth over the period
interests, support equitable treatment of teams, and facilitate (one quarter of the potential maximum award).
global assignments.
IHG’s remuneration structure places emphasis on performance- 50%
TSR
related reward. Individual elements are designed to provide the
LTIP 100%
appropriate balance between fixed remuneration and variable ‘risk’ 2011/2013 Shares
25% Rooms
reward, linked to both the performance of the Group and personal
achievements. Approximately two-thirds of variable reward is in the 25% RevPAR
form of shares.
Performance Structure
The normal policy for Executive Directors and Executive Committee measures
members is that, using ‘target’ or ‘expected value’ calculations, For all award cycles, vesting between threshold and maximum
their performance-related incentives will equate to approximately is on a straight-line basis. The Remuneration Committee has the
70% of total annual remuneration (excluding pensions and benefits). discretion to reduce vesting outcomes based on the quality of the
financial performance of the Company over the period.
Summary remuneration report 41
OVERVIEW
The following table summarises the individual elements of remuneration provided to Executive Directors and Executive Committee members:
Element Purpose and link with strategy
Base Salary (cash) Recognises market value of role, individual skill, performance and experience
Annual Bonus (half cash: half Drives and rewards performance of individuals and teams and aligns personal and corporate
deferred shares – up to 200% financial and non-financial objectives; aligns short and long-term rewards with returns to
of salary) shareholders
Long Term Incentive Plan Drives and rewards delivery of sustained long-term performance aligned with the interests of
(shares up to 205% of salary) shareholders
Pension and benefits (varied) Provides competitive benefits, protection and savings opportunities
GREAT BRANDS
Performance graph
Throughout 2010, the Company was a member of the FTSE 100 index and, for remuneration purposes, used a TSR comparator group of the
Dow Jones World Hotels index. Accordingly, the Remuneration Committee has determined that these are the most appropriate market
indices against which to test the Company’s performance. The graph below shows the TSR performance of IHG from 31 December 2005 to
31 December 2010, assuming dividends are reinvested, compared with the TSR performance achieved by the FTSE 100 index and the
Dow Jones World Hotels index. Over the five-year period, IHG outperformed the FTSE 100 index by 39.6% and the Dow Jones World Hotels
index by 18.5%.
Total Shareholder Return: InterContinental Hotels Group PLC v FTSE 100 and v Dow Jones World Hotels index
250
HOW WE OPERATE
200
150
100
50
0
31 Dec 2005 31 Dec 2006 31 Dec 2007 31 Dec 2008 31 Dec 2009 31 Dec 2010
InterContinental Hotels Group PLC – FTSE 100 – Dow Jones World Hotels – Source: Datastream
Total Shareholder Return Index Total Shareholder Return Index Total Shareholder Return Index
Share ownership
WHERE WE OPERATE
Executive Directors are expected to hold twice their base salary in shares or three times in the case of the Chief Executive. Executives are
expected to hold all shares earned (net of any share sales required to meet personal tax liabilities) until their shareholding requirement is
achieved. The Executive Directors complied with this requirement during 2010.
Non-Executive Directors
Non-Executive Directors are paid a fee which is approved by the Board, having taken account of the fees paid in other companies of
a similar complexity. Higher fees are payable to the Senior Independent Director who chairs the Audit Committee and to the Chairmen
of the Remuneration and Corporate Responsibility Committees, reflecting the additional responsibilities of these roles.
Non-Executive Directors’ fee levels are reviewed annually. Fees have been increased with effect from 1 January 2011 as shown below.
These increases are broadly in line with anticipated executive management salary increases for 2011.
Fees at Fees at
FACTS AND FIGURES
1 Jan 2011 1 Jan 2010
Role £ pa £ pa
Chairman 406,000 398,000
Senior Independent Director & Chairman of Audit Committee 103,000 99,750
Chairman of Remuneration Committee 86,500 84,000
Chairman of Corporate Responsibility Committee 76,000 73,500
Other Non-Executive Directors 65,000 63,000
42 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Summary remuneration report continued
Service contracts
The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. All the current
Executive Directors have such contracts in place. Non-Executive Directors have letters of appointment. David Webster’s appointment as
Non-Executive Chairman is subject to six months’ notice.
Directors’ emoluments
The emoluments shown below represent salary, fees and cash bonuses (excluding pensions and bonus awards paid in shares) and tax
assessable benefits and allowances, including company cars and healthcare cover. No cash performance bonuses were payable to the
Executive Directors in respect of the year to 31 December 2009.
1 Jan 2010 to 1 Jan 2009 to
31 Dec 2010 31 Dec 2009
£000 £000
Executive Directors
Andrew Cosslett 1,571 827
James Abrahamson1 380 –
Kirk Kinsell1 436 –
Richard Solomons 996 531
Non-Executive Directors
David Webster 398 390
Graham Allan2 63 –
David Kappler 100 95
Ralph Kugler 84 80
Jennifer Laing3 74 68
Jonathan Linen 63 60
Ying Yeh 63 60
Former Directors4 1 1
Total 4,229 2,112
1 James Abrahamson and Kirk Kinsell were appointed as Directors on 1 August 2010. The above figures reflect their emoluments as Directors from this date. They are paid
in US dollars. The sterling figures above have been calculated using an exchange rate of $1 = £0.65.
2 Graham Allan was appointed as a Director on 1 January 2010.
3 Jennifer Laing became Chairman of the Corporate Responsibility Committee on 1 March 2009, for which a higher fee is paid.
4 Sir Ian Prosser retired as a Director on 31 December 2003. However, he had ongoing healthcare benefit of £1,179 during the year.
Pensions
Executive Directors participated in either the executive section of the registered defined benefit InterContinental Hotels UK Pension Plan
(the IC Plan) and the InterContinental Executive Top-Up Scheme (ICETUS) (UK-based Directors) or the 401(k) Retirement Plan (401(k)) and
the Deferred Compensation Plan (DCP) (US-based Directors).
The executive section of the IC Plan is a funded, registered, final salary, occupational pension scheme. When benefits would otherwise
exceed a member’s lifetime allowance, the balance is provided by the ICETUS. The 401(k) is a tax-qualified plan and the DCP is a non-tax
qualified plan, both providing benefits on a defined contribution basis, with the member and the relevant company both making
contributions.
Andrew Richard
Cosslett Solomons
UK Plans (final salary) £ £
Transfer value of accrued benefits at 1 January 2010 2,574,100 3,934,700
Increase in transfer value over the year 864,000 773,700
Transfer value of accrued benefits at 31 December 2010 3,438,100 4,708,400
Increase in accrued pension (pa) 23,600 10,400
Accrued pension at 31 December 2010 (pa) 161,500 239,200
Age at 31 December 2010 55 49
US Plans (defined contribution)
The Company contributions made in respect of James Abrahamson and Kirk Kinsell for their periods of service as Directors from
1 August 2010 were £18,000 and £22,300 respectively. Sterling values have been calculated using an exchange rate of $1 = £0.65.
Both Messrs Abrahamson and Kinsell were age 55 at 31 December 2010.
Summary remuneration report 43
Annual Bonus Plan deferred share awards
OVERVIEW
All Directors participated in the ABP during the year ended 31 December 2010. No matching shares are provided on awards. Directors’
pre-tax share interests during the year were as follows:
Value based
on share
ABP ABP price of
awards ABP ABP Value at awards 1243p at
held at awards during shares vested vesting held at 31 Dec 2010
Directors 1 Jan 2010 the year1 during the year £ 31 Dec 2010 £
Andrew Cosslett 231,809 – 55,870 511,021 175,939 2,186,921
Total 231,809 175,939 2,186,921
James Abrahamson 135,0002 – 45,000 405,032 90,000 1,118,700
GREAT BRANDS
Total 135,000 90,000 1,118,700
Kirk Kinsell 74,768 – 13,610 124,485 61,158 760,194
Total 74,768 61,158 760,194
Richard Solomons 147,940 – 35,757 327,055 112,183 1,394,435
Total 147,940 112,183 1,394,435
1 No annual bonus was payable for the period ended 31 December 2009.
2 James Abrahamson received a special share award as part of his recruitment terms in 2009. Full vesting of these shares is subject to his continued service until
February 2012.
Long Term Incentive Plan awards
In 2010 there were three cycles in operation and one cycle which vested. The awards made to Directors who served during the year
ended 31 December 2010 in respect of the performance cycles ending on 31 December 2009, 2010, 2011 and 2012 and the maximum
HOW WE OPERATE
pre-tax number of ordinary shares due if performance targets are achieved in full are set out in the table below. For the cycle ending
on 31 December 2010, the Company’s TSR outperformed the Dow Jones World Hotels index by 8 percentage points and achieved
9.6% per annum growth in adjusted EPS. Accordingly, 73.8% of the award will vest on 16 February 2011.
Maximum
value based
on share
Maximum Maximum Market Maximum price of
LTIP awards LTIP LTIP price per Value at LTIP awards 1243p at
held at shares awarded shares vested share at vesting held at 31 Dec 2010
Directors 1 Jan 2010 during the year during the year vesting £ 31 Dec 2010 £
Andrew Cosslett 685,266 160,8071 73,3722 901.5p 661,449 686,567 8,534,027
James Abrahamson 386,189 79,0081 37,9432 901.5p 342,056 382,711 4,757,097
Kirk Kinsell 263,796 75,4111 21,6852 901.5p 195,490 292,064 3,630,356
WHERE WE OPERATE
Richard Solomons 436,446 101,8181 46,9702 901.5p 423,435 436,155 5,421,407
Total 1,771,697 417,044
1 1,797,497 22,342,887
1 This award is based on performance to 31 December 2012 where the performance measures relate to the Company’s TSR relative to the Dow Jones World Hotels index
and the growth in adjusted earnings per share (EPS) over the performance period. James Abrahamson and Kirk Kinsell received their awards prior to appointment as
Executive Directors on 1 August 2010.
2 This award was based on performance to 31 December 2009. Performance was measured against both the Company’s TSR relative to a group of eight other comparator
companies and cumulative annual growth rate (CAGR) in adjusted EPS over the performance period. The number of shares released was determined according to
a) where the Company finished in the TSR comparator group, with 50% of the award being released for first position and 10% of the award being released for median
position; and b) the cumulative annual growth in adjusted EPS, with 50% of the award being released for growth of 20% per annum or more and 10% of the award being
released for growth of 10% per annum. The Company finished in fourth position in the TSR group and achieved 15.2% per annum adjusted EPS growth. Accordingly,
46% of the award vested on 17 February 2010.
Share options
Between 2003 and 2005, grants of options were made under the IHG Executive Share Option Plan. No executive share options have been
granted since then. Share options held by Directors who served during the year are summarised as follows:
FACTS AND FIGURES
Share Exercised Executive Weighted
options held during options held at average
Directors at 1 Jan 2010 the year 31 Dec 2010 option price3
Kirk Kinsell 109,1501 109,1502 531.06p
Richard Solomons 330,8701 330,8702 532.36p
1 Executive share options granted in 2004 and 2005.
2 Executive share options granted in 2004 are exercisable up to April 2014. Executive share options granted in 2005 are exercisable up to April 2015.
3 Weighted average option price of options held at 31 December 2010.
No Director exercised share options during the year; therefore there is no disclosable gain by Directors in aggregate for the year ended
31 December 2010 (2009 £437,732).
44 IHG Annual Review and Summary Financial Statement 2010
Facts and figures
Investor information
Website and electronic communication Share dealing services
As part of the Company’s commitment to reducing the cost Equiniti offer a postal dealing facility for IHG shares. For more
and environmental impact of producing and distributing information on this service, call 0871 384 2132†. They also offer a
printed documents in very large quantities, IHG’s Annual Report telephone and internet dealing service, Shareview Dealing, which
and Annual Review have been made available to the majority of provides a simple and convenient way of buying and selling shares.
shareholders through the Company’s website www.ihgplc.com/ For telephone dealings call 08456 037 037 between 8.00am and
investors under financial library. 4.30pm Monday to Friday, and for internet dealings log on to
www.shareview.co.uk
Shareholder Hotel Discount Promotion
IHG is currently operating a promotion for discounted hotel stays ShareGift
(subject to availability) for registered shareholders, through a The Orr Mackintosh Foundation operates this charity share
dedicated, controlled access website. For further details please donation scheme for shareholders with small holdings of shares,
contact the Company Secretariat at the registered office address the value of which makes them uneconomic to sell. Details can be
(details shown on page 45) or email companysecretariat@ihg.com obtained from Equiniti, the ShareGift website www.sharegift.org
or by calling ShareGift on 020 7930 3737.
Share price information
The latest share price is available in the financial press, on Missing shareholders
Ceefax and on the Financial Times Cityline Service, telephone Working with ProSearch (an asset reunification company), we
09058 171 690 (calls charged at 75p per minute from a BT landline). continue to look for shareholders who have not kept their contact
Further details of the share price may be found on the Company’s details up to date. We have funds waiting to be claimed and are
website www.ihgplc.com/investors under share price. committed to doing what we can to pay these to their rightful
owners. For further details please contact ProSearch on
Changes to the base cost of IHG shares 01732 741 411 or email info@prosearchassets.com
Details of all the changes to the base cost of IHG shares held since
April 2003 up to December 2010, for UK Capital Gains Tax purposes, Shareholder security
may be found on the Company’s website www.ihgplc.com/investors Many companies have become aware that their shareholders have
under shareholder centre/tax information. received unsolicited telephone calls or correspondence concerning
investment matters. These are typically from overseas-based
Corporate Responsibility Report ‘brokers’ who target UK shareholders, offering to sell them what often
IHG has published an online Corporate Responsibility Report for turn out to be worthless or high-risk shares in US or UK investments.
2010 covering progress on a range of environmental, social and These operations are commonly known as ‘boiler rooms’. More
community issues. This is available on our corporate website and detailed information on this or similar activity can be found on the
can be downloaded directly at www.ihgplc.com/responsibility Financial Services Authority website www.moneymadeclear.fsa.gov.uk
Details of any share dealing facilities that the Company endorses
Registrar will be included in Company mailings.
For enquiries concerning individual shareholdings, notification of
a shareholder’s change of address and for information on a range American Depositary Receipts (ADRs)
of shareholder services please contact the Company’s Registrar, The Company’s shares are listed on the New York Stock Exchange
Equiniti (details shown on page 45). in the form of American Depositary Shares, evidenced by ADRs and
traded under the symbol ‘IHG’. Each ADR represents one ordinary
Dividend services share. All enquiries regarding ADR holder accounts and payment
The Company offers a Dividend Reinvestment Plan (DRIP) for of dividends should be directed to JPMorgan Chase & Co, our
shareholders to purchase additional IHG shares with their cash authorised depositary bank (details shown on page 45).
dividends. For further information about the DRIP, please contact The Company is subject to the reporting requirements of the
our Registrar helpline on 0871 384 2268†. A DRIP application and Securities and Exchange Commission (SEC) in the US and files with
information booklet are available on the Company’s website the SEC an Annual Report on Form 20-F. The Form 20-F can be
www.ihgplc.com/investors under shareholder centre/dividends. found on the Company’s website www.ihgplc.com/investors under
Shareholders who would like their dividends to be paid directly shareholder centre/ADR holders or by visiting the SEC’s website
into a bank or building society account, or who wish to amalgamate www.sec.gov/edgar.shtml
their shareholder accounts in order to avoid duplicate mailing of
shareholder communications should contact our Registrar. Summary forward-looking statement
It may be possible for shareholders to have their dividends paid This Annual Review and Summary Financial Statement contains
direct to their bank account in a local currency. Charges are certain forward-looking statements as defined under US legislation
payable for this service. Further information is available at (Section 21E of the Securities Exchange Act of 1934). By their
www.shareview.co.uk under shareholder centre/overseas nature, such statements involve uncertainty; as a consequence,
payment service. actual results and developments may differ materially from those
expressed in or implied by such statements. A more detailed
If you think that you have out of date dividend warrants or
explanation of the risks and uncertainties related to forward-
outstanding dividend payments please contact our Registrar
looking statements is set out on page 121 of the Annual Report and
for further information.
Financial Statements 2010, copies of which are available from the
registered office of the Company (details shown on page 45) or
Individual Savings Accounts (ISAs)
on the Company’s website www.ihgplc.com/investors under
Equiniti offer ISAs in IHG shares. For further information please shareholder centre/reports.
contact our Registrar helpline on 0871 384 2244†.
Investor information, Financial calendar and Contacts 45
Financial calendar
OVERVIEW
2010
Payment of interim dividend of 8.0p per share (12.8 cents per ADR) 1 October
Financial year end 31 December
2011
Preliminary announcement of annual results 15 February
Final dividend of 22.0p per share (35.2 cents per ADR): Ex-dividend date 23 March
Record date 25 March
Announcement of first quarter results 10 May
Annual General Meeting 27 May
Final dividend of 22.0p per share (35.2 cents per ADR): Payment date 3 June
GREAT BRANDS
Announcement of interim results 9 August
Interim dividend: Payment date October
Announcement of third quarter results 8 November
Financial year end 31 December
2012
Preliminary announcement of annual results February
Contacts
Registered office ADR depositary Priority Club Rewards Designed and produced
HOW WE OPERATE
by Corporate Edge
Broadwater Park, Denham JPMorgan Chase & Co If you wish to enquire about,
Buckinghamshire UB9 5HR PO Box 64504 or to join Priority Club Rewards, Print management by
St. Paul, MN 55164-0504 IHG’s loyalty programme for HH Associates
Telephone +44 (0) 1895 512 000
USA frequent travellers, please Printed by Royle Print
Fax +44 (0) 1895 512 101
Telephone +1 800 990 1135 visit www.priorityclub.com
www.ihg.com or telephone:
(US callers – toll free) This Report is printed
For general information
+1 651 453 2128 0871 226 1111∞ (in Europe, on 9lives 80 Silk which is
about the Group’s business Middle East and Africa)
(non-US callers) made up of 60% FSC post-
please contact the Corporate (toll charges apply)
Email: consumer recycled fibre,
Affairs department at the
jpmorgan.adr@wellsfargo.com +1 888 211 9874 (in US and 20% pre-consumer recycled
above address. For all other
www.adr.com Canada) (toll free) fibre and 20% FSC virgin fibre
enquiries please contact the
from FSC managed forests.
WHERE WE OPERATE
Company Secretariat at the +1 800 272 9273 (in Mexico)
Stockbrokers (toll free) Our printer is also FSC and
above address.
Bank of America Merrill Lynch Carbon Neutral accredited.
+1 801 975 3013 (Spanish)
Registrar Goldman Sachs (in Central and South America)
Equiniti, Aspect House (toll charges apply)
Auditors
Spencer Road, Lancing +1 801 975 3063 (English)
West Sussex BN99 6DA Ernst & Young LLP
(in Central and South America)
Telephone 0871 384 2132*† Investment bankers (toll charges apply)
(UK callers) +63 2 857 8788 (from most
Citi
+44 (0) 121 415 7034 Bank of America Merrill Lynch countries in Asia Pacific)
(non-UK callers) Goldman Sachs (toll charges apply)
www.shareview.co.uk
Solicitors
∞
Telephone calls to this number are
FACTS AND FIGURES
charged at 10p per minute. Standard
*For those with hearing difficulties Freshfields Bruckhaus network rates apply. Calls from
a text phone is available on mobiles will be higher.
0871 384 2255† for UK callers with Deringer LLP
compatible equipment.
†Telephone calls to these numbers
are currently charged at 8p per
minute if using a BT landline. Other
telephony provider costs may vary.
For further information visit www.ihgplc.com/investors
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United Kingdom
Telephone +44 (0) 1895 512 000
Fax +44 (0) 1895 512 101
make a booking at
www.ihg.com
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